Rajapakse dismissed the legislature from midnight on Tuesday, two months ahead of schedule, his spokesman Lucien Rajakarunanayake said, adding that it was up to the elections commissioner to announce a polling date.
The dissmisal came hours after the defence ministry said ex-army chief Fonseka, who was seized by troops at his office in Colombo on Monday, would face a court martial even though he quit in November following a rift with the president.
The opposition said Fonseka was "grabbed" by the military as he discussed plans to contest upcoming parliamentary polls with several senior party leaders who had backed his failed bid for the presidency last month.
The government said Fonseka had been "conspiring" with opposition politicians while he was still the army chief.
"The broader charges were that he engaged with political leaders and political parties that were working against the government," defence ministry spokesman Keheliya Rambukwella told reporters.
Treason charges possible
"He shall be tried and punished for that offence by a court martial."
Asked if Fonseka could be tried for treason, Rambukwella said: "It could be one of the charges."
Fonseka, 59, the only four-star general in the army, quit after falling out with his commander-in-chief, Rajapakse, whom he later challenged in January presidential elections.
Shortly after the poll, which Rajapakse won comfortably, the government accused Fonseka of plotting a coup to overthrow the president and assassinate his family members.
And earlier this month, Rajapakse sacked a dozen senior military officers described by the defence ministry as a threat to national security. More were arrested from Fonseka's office.
Sri Lanka's former peace facilitator, Norway, joined France and the US in expressing concern over Fonseka's dramatic arrest and deplored the mounting government pressure on independent journalists and dissidents.
Fonseka a 'national hero'
"There is a tremendous need for the government of Sri Lanka to work to overcome the fissures that exist within its society," said US State Department spokesman Philip Crowley.
The Sri Lankan government is concerned about Fonseka's apparent willingness to testify at any probe into alleged war crimes committed by Sri Lankan troops last year in the final stages of the conflict with Tamil Tiger rebels.
Hours before his arrest, Fonseka had told reporters he was willing to face an international investigation.
"I am not prepared to protect anyone, if they have committed war crimes," Fonseka said.
The government has resisted international calls for a probe, amid charges that a senior defence official ordered the killing of surrendering rebel leaders.
The United Nations says 7,000 civilians died during the final stages of the conflict.
Fonseka's arrest caps a dramatic fall from grace for a man who, eight months ago, was regarded by many as a national hero.
'Abduction, not arrest'
As the battlefield architect of the victory over the Tigers last May, Fonseka had seemingly secured his legacy as the commander who finally crushed their 37-year campaign for an independent Tamil homeland.
But his bid to translate that success into political power proved his undoing.
Fonseka's wife Anoma gave a tearful press briefing on Tuesday, saying her husband had been treated "like an animal".
"This is not an arrest. It is an abduction," she said. "What I want to tell the government is: 'Just be reasonable. Treat him like a human being.'"
Opposition leader and former premier Ranil Wickremesinghe said Fonseka's arrest was "a big blow to democracy" in Sri Lanka.
"This should never have happened," he said.
