President Thein Sein made the announcement in a statement broadcast on state television.
The government’s struggle to contain the unrest in Meikhtila is proving another major challenge as it attempts to chart a path to democracy after nearly half a century of military rule.
Residents of Meikhtila remain locked in their homes, too afraid to walk the streets.
Opposition National League for Democracy politician Win Htein said at least five mosques had been burned down since the violence started on Wednesday.
He said there was no immediate sign of fresh violence but the situation remained tense.
Angry Buddhist residents and monks had prevented the authorities from tackling blazes at Muslim homes that had been set on fire, he added.