The Northern Secretary suggested today that the onus was on the IRA to make a movement on arms decommissioning.
Speaking on BBC1's Breakfast with Frostprogramme, Dr Reid said: "What we need to do is break the impasse, and hopefully what will come soon is for the IRA to take that step they said they were prepared to take.
"If they do, I believe we can get a new dynamic. If they don't, I think we have a very serious problem."
Yesterday Dr Reid announced the lifting of the suspension of the Northern Ireland Assembly.
He said today: "What I did yesterday was extend the time during which we may have a breathing space and I would hope that no-one, in or outside Northern Ireland, will underestimate the serious position we are now in.
"A window of opportunity comes along every so often. If you miss that window of opportunity, you can sometimes be set back by years."
Meanwhile Ulster Unionist leader Mr David Trimble is reported to be finalising plans to oust Sinn Féin from the Executive in a bid to force the IRA into action over decommissioning.
The former First Minister also warned he will pull his own ministers from the cabinet if IRA guns are not put beyond use.
Mr Trimble spoke of his party's intentions to have the two republican ministers, Mr Martin McGuinness and Ms Bairbre de Brun, banished from the cabinet.
"On Monday morning we will table in the Assembly a motion to exclude Sinn Féin ministers from the Executive,'' he said.
It is expected to take up to three weeks before the plan can be debated, and the chances of achieving the required cross-community backing for such a move are virtually nil.
In these circumstances Mr Trimble explained the three UUP members of the Executive, Sir Reg Empey, Mr Michael McGimpsey and Mr Sam Foster, could not continue in their posts. "It would be impossible to do so,'' he said.
Democratic Unionist MP Mr Nigel Dodds accused Mr Trimble of lagging behind his party, which has already submitted a motion to oust Sinn Féin from government.
Mr Dodds claimed the former First Minister had been forced by hardline UUP members to accept the DUP had taken the right approach.
PA