Sinn Fein cannot be part of the government of NI unless the IRA gives up paramilitary and criminal activity, Prime Minister Tony Blair has said.
Tony Blair made the comments during a news conference
He said the refusal of the IRA to give up such activity was the reason for the current political stalemate.
Sinn Fein is facing sanctions after a £26.5m Belfast bank robbery was blamed on the IRA. The IRA has denied this.
Mr Blair said the impasse had arisen because the governments had not got the commitment and action from the IRA.
"This has now got to happen. It's the only way to move this situation forward, he told reporters at his monthly news conference at Downing Street on Friday.
The prime minister added: "The overwhelming view now in the whole of the island of Ireland, north and south, is there cannot be a place for Sinn Fein in an inclusive government in Northern Ireland unless there is a complete end to all forms of paramilitary activity and criminality by the IRA.
"That's what the Good Friday Agreement said."
Sinn Fein could face penalties of more than £500,000 a year following the accusations about December's Northern Bank robbery.
In a speech on Friday night, Irish Foreign Minister Dermot Ahern said he had been compelled to reflect on "whether the Provisional leadership wanted a final peace - a settlement - at all, or just the never-ending process".
"If we are to move forward - particularly if a prospective unionist partner is to be found - these issues must be dealt with and resolved," he said.
"In this context the quandary for the Irish Government is clear - we can't order the Provisional movement to deal with these issues.
"Only the Provisional leadership can - and that's exactly what we have asked them to do."
DUP leader Ian Paisley said republicans had "failed to pass the test" on ending their links to criminality and terrorism.
"There will be no Sinn Fein/IRA in the government of Northern Ireland so long as the DUP is leading unionism," he said.
Ulster Unionist leader David Trimble said the republican leadership should "do the right thing" and cooperate with the police on last month's murder of Robert McCartney and December's Northern Bank raid.
Speaking after meeting the PSNI chief constable on Friday, Mr Trimble said there was "no question" IRA members were involved in the murder of Mr McCartney.
He appeared to rule out talks in the immediate future with Sinn Fein. He said his party had given republicans the chance to engage in politics over the past six years and "they had chosen crime".
Poll indicates satisfaction with Gerry Adams is on the wane
Meanwhile, the Irish Prime Minister Bertie Ahern appears to have toughened his position on republican demands for the early release of the IRA killers of a police officer.
Detective Jerry McCabe was shot dead by the IRA during a robbery in County Limerick in 1996.
Last December, Mr Ahern said the men would be recommended for early release as part of a political deal in Northern Ireland.
However, Mr Ahern told Radio Limerick on Friday that it would not happen on his "watch" and that the killers' release was "no longer an issue".
'Drop in satisfaction'
The comments come on the same day a poll in the Irish Independent newspaper suggested support for Sinn Fein was almost unchanged, despite claims about the Northern Bank raid.
The new Millward Brown IMS poll indicated that support for the party stood at 9% - down just one point on the last comparable poll in November.
However, the poll of 1,000 people in Ireland, also suggested a big drop in satisfaction with Sinn Féin President Gerry Adams.
Satisfaction with Mr Adams stood at 31%, down 20% since November.
Three out of every five people questioned also believed the IRA was responsible for the Northern Bank raid, while 62% said Sinn Féin and the IRA were "one and the same".
It also indicated that 46% believed the claim of Irish Minister for Justice, Michael McDowell, that senior Sinn Féin leaders were in the IRA.