The North talks chairman, Senator George Mitchell, said he was still confident that a settlement could be reached by the May deadline. "I remain convinced that agreement can be reached by then or even possibly before then, once there is a determination by the participants to move to that final stage," he said.
Senator Mitchell said the people of Northern Ireland must make sure their future was not decided by a relatively small number of gunmen committed to violence and acting in defiance of democratic principles. He added: "That is a fateful choice which will be decided over the next several weeks."
The Alliance Party leader, Lord Alderdice, said it would have been disastrous for the process if the UDP had been allowed to stay. It would have opened the floodgates to other terrorists to go on a killing spree. He added: "We are not prepared to make fish of one and flesh of the other, to treat loyalist paramilitaries differently from republicans."
The SDLP leader, Mr John Hume, said he hoped the UDP could return. "If there is a ceasefire that is clearly genuine and unequivocal, we agree that the door should be left open to them to return to the process."
The Sinn Fein president, Mr Gerry Adams, said the UDP withdrawal would do nothing to lift the fears among nationalists in Northern Ireland. "The crisis has not been defused," he said.
He also attacked the Ulster Unionist Party over its refusal to engage with republicans in the peace process. "The UUP cannot wash their hands of what is happening on the ground. It is they who have created the vacuum," he said.
"Mr Trimble's refusal to talk sends a potent signal which at its most extreme end leads to the killing of Catholics."
Before the UDP announced its decision, Mr Adams - although he did not demand the UDP's expulsion outright - said that if the British government did not act, it would send the message that the killing of Catholics did not matter.
"Does that not collapse the process much more quickly than any other decision of the government?" he asked.
"Our position becomes untenable unless the governments face up to their responsibilities."
Mr Adams said his party had told the British government it must make a decision. "If the IRA had conducted these killings, do you think the government would be in a dilemma over Sinn Fein's involvement in these talks?"
The British government, he said, must discharge its responsibilities in a forthright way.
He added: "The dilemma is that those people who have been killed in the recent weeks, and their families and the communities from which they come and those whom we represent and other parties represent, will be sent a very clear message - it doesn't matter if you're a Catholic."
Ms Monica McWilliams of the Northern Ireland Women's Coalition said the withdrawal of the UDP was a disaster.
"They offered an analysis that needed to be heard and I don't hold any of them responsible for the deaths of those men last week," she said.
"I have gone an extra mile to understand them and I do believe they didn't need to be excluded. They worked their backsides off to try and persuade the UFF to call that ceasefire.
"But instead of that, what did we give them today? The boot out through the door. Now, I am very concerned about the UFF and their response."
Mr Peter Robinson, deputy leader of the Democratic Unionist Party, commented: "If I were Gary McMichael, I would be pretty angry. There is nothing the UDP are guilty of that others in those talks are not also guilty of. An indictment should be brought against the PUP and Sinn Fein," he said.