Four officers were stripped of their command pending the outcome of a judicial inquiry into the incident in which troops opened fire and allegedly later beat up villagers demanding clean drinking water.
"The commander of the army has ordered to relieve four senior officers... from their duties with immediate effect," the military said in a statement, which coincided with this week's visit by the UN's human rights chief.
Three villagers were killed in the shooting on August 1 just outside the capital, which sparked international concern.
Military officials said the four officers would retain their pay and remain within their units, until the outcome of the inquiry.
The archbishop of Colombo was among those who condemned the military-led attacks that also wounded more than 50 residents of the village of Weliweriya.
Cardinal Malcolm Ranjith said at the time that troops had also violated the sanctity of a local church by beating up people who rushed there to escape the army shooting.
The army has said it was forced to respond after coming under attack.
Witnesses told a Sri Lankan judge heading an inquiry on Thursday that soldiers stormed the church, and ordered some of the people -- including children -- to kneel down, before beating them with sticks.
Troops were also accused of opening fire inside the church compound, the inquiry heard on Thursday.
The army's statement comes as United Nations rights chief Navi Pillay was expected to wind down her week-long fact-finding mission to the island to probe alleged war crimes.
Pillay is set to meet with President Mahinda Rajapakse on Friday evening before leaving the island on Saturday after holding a news conference.She is visiting Sri Lanka in connection with allegations that troops killed up to 40,000 civilians in the final stages of the war against Tamil rebels in 2009. Sri Lanka has denied that its troops were responsible for killing civilians or committing any war crimes.