Prime Minister Tony Abbott says human rights abuses across all Commonwealth countries can be stamped out if the group upholds core values.
Mr Abbott on Friday arrived in the Sri Lankan capital Colombo, where he met with British Prime Minister David Cameron ahead of a major address to a Commonwealth Heads of Government Meeting (CHOGM).
The summit had been mired in controversy after the leaders of Canada, India and Mauritius - the next host country - boycotted it over concerns about Sri Lanka's human rights record after almost three decades of civil war.
Mr Abbott told reporters before the opening ceremony, which will be overseen by Prince Charles representing the Queen, that Sri Lanka had signed the Commonwealth charter of values and was committed to honouring it in "good faith".
He would encourage the host toward reconciliation and "binding up the wounds" of the civil war.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"We want a Sri Lanka where people of different ethnicity, different faith can live and work together in peace and harmony," Mr Abbott said.
"This country can be one of the jewels of Asia."
The Commonwealth charter - signed at the Perth CHOGM two years ago - commits members to upholding fairness, justice and the rule of law.
Human rights advocates say Mr Abbott is deliberately toning down his criticism so as not to jeopardise his government's work with Sri Lanka on stopping people-smuggling.
Mr Abbott will attend the first working session of the summit on Friday before meeting Prince Charles, who turned 65 on Thursday, at a lunch and holding bilateral meetings with leaders from Pakistan and Nauru.
