By Shihar Aneez and Ranga Sirilal

COLOMBO (Reuters) - Sri Lanka is setting up a presidential commission to investigate a mass grave with the remains of more than 150 people, an official spokesman said on Sunday.

Two reports submitted to a court last week said that the human remains, in the town of Matale 142 km (88 miles) north of the capital, dated back to the period 1986-1989 when Sri Lanka faced a Marxist insurrection.

"The president has decided to appoint a presidential commission to inquire into the mass grave. This will be apart from the ongoing police inquiry," Mohan Samaranayake, President Mahinda Rajapaksa's spokesman, told Reuters.

The decision to set up commission comes five months after the mass grave was found at a building site near a hospital.

Ajith Jayasena, the judicial medical officer at the hospital, said the excavation was still going on and there may be more remains in the grave.

Marxist rebels of the Janatha Vimukthi Peremuna (JVP), or People's Liberation Front, launched the second phase of an insurrection in the late 1980s after the first one in 1971.

The security forces responded ruthlessly and many rebels were killed or disappeared. The JVP later transformed itself from a rebel group into a political party.

(Writing by Shihar Aneez; Editing by Stephen Powell)