Police have vowed to carry out the arrest of Sampath Vidanapathirana “today or tomorrow” – but his exact whereabouts are not clear.
Khuram Shaikh was shot and stabbed to death at a hotel in southern Sri Lanka on Christmas Day 2011.
Six men are accused of the murder of the Red Cross worker from Rochdale.
The men also face charges including the rape of a woman and possessing unlawful weapons.
Mr Vidanapathirana is the town council leader of Tangalle, the southern resort town in Sri Lanka where Mr Shaikh was killed.
Mr Shaikh, 32, had been working in Gaza fitting prosthetic limbs, but was on holiday in the resort.
The arrest warrant against Mr Vidanapathirana was issued by the Colombo High Court after he failed to attend a procedural session on Thursday.
An associate said his absence was due to being admitted to a private hospital in Galle, but staff at the hospital said he has been discharged on 8 January.
The men have been on bail for over a year, with a trial date set for 26 March.
Before he attended last November’s Commonwealth summit in Sri Lanka, British Prime Minister David Cameron said he would be raising the Khuram Shaikh case with authorities on the island.