Early intelligence reports indicate that the IRA have "delivered on their promise" about ending violence for good, the NI secretary has said.
IICD said IRA had put all of its weapons beyond use
However, Peter Hain said that as well as "bombs and bullets, punishment attacks, intelligence-gathering and targeting" also had to end.
He did not expect devolution to be restored within weeks, but direct rule "cannot last years".
The "period of political paralysis" had to end, he told BBC News.
"It has got to come sooner rather than later and I will be working flat out in the coming months.
"Especially after the reports of the Independent Monitoring Commission - one expected in a few weeks' time - then crucially the one in January."
If that gave "a clean bill of health to the implementation of the IRA's promises" then it would be "time to start talking and move NI forward", he said.
However, Democratic Unionist Nigel Dodds said Mr Hain should realise that "the mere absence of activity, whether terrorist or criminal, does not in itself qualify any organisation for government".
"Unless there is unequivocal evidence of the dismantling of the criminal structures and the disbandment of the terrorist machine, the fact that the Provos keep quiet for a few months will not convince unionism to admit Sinn Fein into government," he said.
Mr Dodds said the DUP would not be "pushed over".
Meanwhile, Taoiseach Bertie Ahern said he would like devolution to happen as soon as possible.
Speaking on Irish state broadcaster RTE on Sunday, he said he believed the gun was gone for good from Irish politics.
Mr Ahern said he was hoping for a positive report from the IMC in January that would pave the way for the implementation of the Good Friday Agreement.
Last week, Sinn Fein President Gerry Adams said the British and Irish governments must move quickly towards re-establishing devolution.
Mr Adams said unionists would need time to absorb the "completeness" of the IRA's disarmament, announced by the head of the arms decommissioning body.
However, the DUP said the IRA must "end criminality" before it would enter any talks with Sinn Fein.
On Monday, General John de Chastelain, head of the arms decommissioning body, said the IRA had put all of its weapons beyond use.
'Inefficient waste of resources'
Speaking on Sunday, Mr Hain said under direct rule he aimed to take as many difficult decisions as possible, including the introduction of water charges and rate reform
"I worry about the fact that we have a massive bureaucracy.
"We are over-administered, we have bureaucracy all over the place and we are not directing resources which have been pushed in by our government in record amounts."
There were "50,000 empty places in our schools across the board, rising over the next few years to 80,000", said the NI secretary.
Mr Hain said January's IMC report would be crucial
"That is a massive and inefficient waste of resources. In the end, if they are concentrated as they are with many small schools, you get lower education standards.
"Northern Ireland is falling behind and it is partly because we have not tackled this history of an educational structure which is just not fit for the century."
He added: "I do not want any child, on grounds of their faith, class background, or where they live, to be facing discrimination in opportunity."
It was not a question of abandoning faith-based schools, said Mr Hain.