The government has officially recognised the Ulster Defence Association's ceasefire in a bid to move the peace process forward.
Paul Murphy hopes the UDA is prepared to take a 'different road'
Secretary of State Paul Murphy said he believed that Northern Ireland's biggest loyalist paramilitary group was ready to move away from violence.
Government recognition for the UDA ceasefire was removed in October 2001 because of its involvement in violence.
The group declared a new ceasefire in February this year.
Senior members of the UDA leadership held talks with Mr Murphy at Stormont last week.
Since that meeting, senior government officials and loyalists have remained in contact.
Mr Murphy said: "I am persuaded that UDA is now prepared to go down a different
road, moving away from its paramilitary past."
A major announcement from the paramilitary group is expected in return for the government recognition, which takes effect from midnight on Sunday.
Despite the UDA's latest ceasefire, it has been a "specified" organisation for more than three years.
The UDA declared a new ceasefire in February this year
The UDA's involvement in feuding, racketeering and other paramilitary activity meant that the government did not recognise its cessation.
Mr Murphy said his decision to "de-specify" the UDA and the related Ulster Freedom Fighters (UFF) was based on a number of factors.
These included its re-stated commitment to its ceasefire and the organisation's "generally constructive approach" during this year's marching
The secretary of state also said that there had been some reduction in paramilitary activity by its members over the past six months, as reflected in the IMC's recent report.
However, he said that the UDA continues to be involved in "a range of unacceptable activities which must be brought to an end".
Mr Murphy also paid tribute to the "positive" political efforts by the UDA's advisers in the Ulster Political Research Group (UPRG).
Reacting to the statement, the UPRG said that it welcomed the move and that it would allow further progress.
Sinn Fein assembly member Gerry Kelly said the move would be a welcome development "if it marked an end to its campaign of sectarian and racist attacks and intimidation".
Ulster Unionist Chris McGimpsey said that the UDA must be given the same opportunity as other paramilitary organisations, such as the IRA, "to prove themselves or to fail".
SDLP leader Mark Durkan reacted with scepticism and extreme caution to the decision, saying that the secretary of state may recognise the UDA ceasefire but nationalists and ethnic minorities do not.
Alliance leader David Ford said he had "severe reservations" about the matter as he had seen no evidence that the UDA had stopped its criminal and paramilitary activities.