Sri Lanka suffered its worst nationwide power cut in 20 years on Sunday causing water shortages, transport and trade disruptions across the country, officials said.

The national grid switched off early afternoon and attempts to reconnect failed as the system was unable to cope with night time demand, a spokesman for the state-run Ceylon Electricity Board (CEB) utility said.

It was the second major power failure in less than a month, following a three-hour disruption late February.

Six hours into the latest breakdown, there was no word on when power would be restored, making the latest blackout the longest since May 1996 when the entire country was without electricity for four days.

CEB chief Anura Wijepala accepted responsibility for the latest breakdown and offered to resign, the state-run Daily News said.

Traffic signals failed and public transport was disrupted, while many shops were unable to process credit card payments and fuel pumps were out of action.

Internet and mobile phone services were also disrupted in many places where there were no stand-by generators.

Power blackouts occur sporadically in Sri Lanka but the latest nationwide outage came even as an investigation was underway into last month's embarrassing disruption while New Zealand Prime Minister John Key was visiting the island.