The action by Chandrika Kumaratunga's came as the nation's prime minister, Ranil Wickremesinghe, was in Washington on an official visit.
The BBC said the declaration -- widely seen as a constitutional coup -- allows troops to enter homes without warrants, arrest people at will and to detain prisoners for up to a year without charges.
Kumaratunga, earlier this week, suspended parliament and fired two cabinet ministers.
But Wickramasinghe downplayed the situation, saying he told President Bush "things had changed" in Sir Lanka, but "this is part of Sri Lankan politics."
He told the BBC, "For 25 years we have had these ups and downs," and said he would "sort it out" when he returns to Sri Lanka on Friday.
The Tamil Tiger rebels, who have called a cease fire in their 20-year battle for independence, are expected to react with violence. Under the last state of emergency, the Tamils were targeted by security forces.
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