Ulster Unionists will not serve on a new Policing Board under the terms announced by the secretary of state, party leader Sir Reg Empey has said.
The Policing Board holds the PSNI to account
NI Secretary Peter Hain said he wants a reconstituted board to take over next April.
He indicated if Sinn Fein did not join he would give their two seats to independent nationalists.
Sir Reg said this was unacceptable and would turn the board, which holds the PSNI to account, into a "quango".
"The Policing Board has been engaged in good work," he said.
"It should continue to be accountable and democratically controlled.
"Instead we are facing the reality of a Policing Board which is made up of a majority that does not represent the voting intentions of the public.
"This is a crisis in the making. We will not serve on a quango."
On Thursday, Mr Hain told the House of Commons the d'Hondt formula would be used to appoint members in April next year.
Mr Hain said this would mean 4 DUP members, 2 SDLP, 2 UUP and 2 Sinn Fein. But he said Sinn Fein had "expressed no intention" of joining the board.
The DUP had called for the board to be reconstituted to reflect the party's success in the 2003 assembly elections.
Mr Hain said: "I accepted the arguments... that the DUP was in an unfair situation and that the present composition of the board - its political section - did not reflect the last assembly elections."
He added: "It is vital that community balance is maintained. I don't know if Sinn Fein are going to come onto the board.
"They have expressed no intention of doing so, but if they want to get involved in devolved government... they will have to take their responsibilities for policing seriously, including going on the board."
SDLP Policing Board member Alex Attwood said his party had also been told that Sinn Fein's seats on the new board would go to nationalists if they were not taken up.