Political turmoil has turned to violence as five people died and around 200 were injured during protests against the government amid the worst economic crisis in the country's history.
Australia had announced three full-strength squads for the tour, which includes a Twenty20 series, five ODIs as well as two Tests in Galle. An Australia 'A' team is also scheduled to play four matches.
The Australian Associated Press reported that "CA officials had until this point been certain the tour would go ahead, and remain confident. Head of security Stuart Bailey completed a reconnaissance tour of the country last month in the midst of the economic crisis, and it was cleared as safe to visit.
"CA officials will now start to monitor the situation more closely following Monday night's violence, but are still confident the tour will proceed."
Two of the T20 matches that kick off the tour early next month are in the capital Colombo, where the worst of Monday's violence took place, as are three of the ODIs and two of the 'A' matches.
Australia's players are scheduled to arrive into Colombo in three weeks for the start of their June 7-July 12 tour.