According to The Times, the paramilitary group says its decision will stand even if the IRA's ceasefire ends.

An LVF spokesman said: "The group is finished. The war is over."

The paper says the group may disband and publicly surrender "a small amount of arms" within two weeks.

Writing on the wall: An LVF mural

The report follows an LVF statement in August which said it was declaring an "absolute, utter finish" to its terror activities, the first such announcement from a paramilitary organisation in the province.

The LVF also declared a ceasefire six months ago.

However, despite the LVF claims, the government has so far not officially recognised the cessation of hostilities as genuine.

Recognition that a militia's ceasefire is genuine is a condition for its prisoners to be freed from jail early under the terms of Northern Ireland's historic 10 April peace accord, the Good Friday Agreement.

On Wednesday, the province's First Minister, David Trimble, asked Northern Ireland Secretary Mo Mowlam to consider declaring the LVF ceasefire genuine.

Mo Mowlam: Wary of LVF claims

She, however, is wary that the tactic may be a ploy to get its prisoners released early, The Times said. The LVF is opposed to the Good Friday Agreement.

The spokesman interviewed by The Times said the LVF realised that Northern Ireland had massively backed the accord in a referendum in May, and there was no point in "defending people who don't wish to be defended".

To show its commitment, the LVF would hand over weapons publicly in front of television cameras, he added.

The LVF, formed in 1996, soon established a reputation for ruthlessness, including the murder of a young Roman Catholic girl as she slept beside her Protestant boyfriend.

Its aim has been to defend, by terror, British rule over Northern Ireland against the Irish Republican Army and other pro-united Ireland groups.

Under the leadership of Billy Wright it drew its membership mainly from the mid-Ulster region.

Since Wright's murder in the Maze Prison last year, its size has declined rapidly and is currently thought to have little more than 50 members.