The JHU, or the National Heritage Party, said Saturday's vote showed the people were unhappy with the government of Prime Minister Ranil Wickremesinghe, which has struggled to overcome internal divisions.
"There must be urgent reforms," said JHU leader Champika Ranawaka, who is also minister for urban development.
"There must be giant changes that will directly address the aspirations of the people."
Wickremesinghe is due to address reporters later Friday on the future of the shaky coalition.
He came to power in 2015 on a pledge to end the corruption that took hold under the former regime of Mahinda Rajapakse, who served as Sri Lanka's president for 10 years.
But Rajapakse, whose family wields enormous influence in Sri Lanka, has staged a dramatic comeback after launching his Sri Lanka Podujana Peramuna or People's Front party.
The ruling coalition has also been plagued by internal divisions that burst into the open in the two-month run-up to Saturday's election.
President Maithripala Sirisena's party contested the elections independently and suffered a worse defeat than the prime minister's party.
Rajapakse's party comfortably won in all regions bar the battle-scarred north and east where, as president, he brutally crushed a separatist Tamil movement to end the island's ethnic war in 2009.
He has demanded a snap general election and challenged his successor's right to govern after his drubbing in crucial mid-term polls.