The Loyalist paramilitary Ulster Volunteer Force (UVF) and the Red Hand Commandos have broken off contact with the international decommissioning body in Belfast.
Progressive Unionist Party Assembly member Mr Billy Hutchinson, who was the negotiator for the two loyalist groups, said they were withdrawing because of the handling of the peace process.
Party leader Mr David Ervine also announced that the PUP was breaking off all contact with Sinn Féin until he knew exactly what Republican intentions were towards the Unionist community.
The PUP accused British Prime Minister Tony Blair and Sinn Féin of operating an exclusive peace process and of trying to strike a deal behind closed doors.
Mr Hutchinson announced he had just talked to Gen John de Chastelain's commission. The North Belfast MLA said: "I have informed them that the UVF and Red Hand Commando have asked me and my colleagues to suspend any talks with them".
The PUP assemblyman said there was great disillusionment in the two loyalist groups with the handling of the peace process, claiming the Government only seem to be interested in a deal with republicans.
"The blame for this lies fairly and squarely with Sinn Féin and the Prime Minister," he said. Last night the UVF and Red Hand Commando warned in a statement that its commitment to the peace process was "faltering".
They blamed the IRA for "current dearth of confidence in the process" and accused the republican paramilitary group of the wholesale sectarian targeting of unionist people.
The group also warned the British and Irish Governments against making unilateral concessions to republicans in a bid to revive devolution at Stormont.
The UVF and Red Hand Commando insisted: "The underhanded approach of the past must end."
Mr Ervine said the UVF statement was "confirmation of the dismay in the unionist community when it looks at the peace and political process. It is significant that the whole of unionism right across the board is saying pretty much enough is enough," he said.
"An open transparent process only has a chance. A closed process only dealing with the wants of Sinn Fein will not succeed."
Mr Ervine said it was difficult to understand where republicans were coming from while there was considerable targeting by the IRA of people and it was engaged in Colombia and other activities.
This morning, Police Chief Constable Hugh Orde described as "worrying" last night's statement. However, he said he had no intelligence to suggest the UVF ceasefire was under threat but said: "Any organisation that is currently on ceasefire . . . to talk of walking away from it causes me concern".
PA