Three of the island's nine provincial councils are to go to mid-term polls early September.
"We have formed an alliance with Ceylon Workers' Congress (CWC) and Upcountry People's Front", Mano Ganesan of the Democratic People's Front (DPF), which is another minority Tamil party said.
Ganesan said the CWC, UPF and DPF will be vying for votes from Tamils of Indian-origin living in the two districts of Ratnapura and Kegalla in the Sabaragamuva (southwestern) province.
Sabaragamuva province along with north central province and the eastern province councils have been already dissolved mid-term to face polls in September.
Ganesan's DPF is an opposition party while CWC and UPF are both allies of the president Mahinda Rajapaksa.
Ganesan said both CWC and UPF stood little chance of winning representation in the Sabaragamuva council if they opted to go with the ruling coalition.
Meanwhile the main Muslim party, Sri Lanka Muslim Congress today ended speculation that they would be forging an electoral alliance with the main Tamil party, Tamil National Alliance (TNA), to contest the eastern provincial council, saying that they would remain with the ruling coalition.
The SLMC policy making high command has decided to stay with the ruling alliance, its spokesman Dr Hafeez said.