The Northern Secretary, Dr John Reid, has warned the Ulster Defence Association that its ceasefire has been put under review.
Dr Reid held a crisis meeting yesterday with the RUC Chief Constable, Sir Ronnie Flanagan, and the British army general officer, Lieut Col Alistair Irwin, to discuss the escalating sectarian violence, which has resulted in two killings this month, those of Mr Ciaran Cummings, a young Catholic waiting for a lift when shot dead, and Mr Gavin Brett, a Protestant gunned down outside a GAA club.
Both killings have been claimed by the Red Hand Defenders, a cover name previously used by the UDA and the Loyalist Volunteer Force.
The Northern Secretary requested a full report on the state of the UDA's ceasefire from the Chief Constable in a week's time, on the basis of which he would decide if it had been breached.
"I give this warning to the UDA and ask them to reflect upon it: I'm keeping their ceasefire under constant review . . . In a week's time, I will take a political decision based on the evidence provided by the Chief Constable on the state of their ceasefire," Dr Reid said.
He described the Red Hand Defenders as a "cover job for those who engage in acts of violence but want to avoid the responsibility". While his information was that the UDA as an organisation had not abandoned its ceasefire, he had received "worrying" evidence that individual members had been involved in the recent violence.
If the Northern Secretary decides the UDA ceasefire is no longer intact, it would become a "specified" organisation, making its members liable to criminal charges. Former loyalist prisoners could return to jail on an individual basis if evidence existed that they had broken their licence conditions.
The meeting took place following further violence on Monday night when water cannon were deployed to disperse loyalist and nationalist crowds attacking each others' homes in the Whitewell area of north Belfast.
On the Crumlin Road a 250strong audience, many of them children, escaped injury as two blast-bombs were thrown at the Brookfield Complex where they were watching a community play as part of the Ardoyne Fleadh. A car was damaged in the incident, for which the Red Hand Defenders claimed responsibility.
Following the incident, the audience was asked whether it wanted the performance to be halted, but reportedly insisted it continue. Fleadh organisers said they intended to step up security for the remainder of the festival, which ends on Sunday.
Meanwhile, an SDLP delegation has held a meeting with the North's Security Minister, Ms Jane Kennedy, to demand a review of loyalist ceasefires and propose measures for the protection of vulnerable Catholic areas.
The party chairman, Mr Alex Attwood, said it was vital for the British government to make a declaration on the state of the ceasefires.
"At the very least three out of six UDA/UFF command areas and its leaderships are not honouring ceasefire commitments. The range and intensity of sectarian attacks are increasing. A front group issues a threat against all. The [British] government must confirm its assessment of UDA/UFF ceasefires and take such action as necessary thereafter," he added.
The RUC has described a device left under a car in Armagh as sectarian. British army bomb disposal experts were called in to deal with the pipe-bomb-type device located in the Ashley Heights area of the city.
Army technical officers also dealt with an explosive device in Fisherman's Quay in Carrickfergus, Co Antrim. The object was described as "very old" and is believed to have been in the water for some time.