The government was prepared to appoint an independent panel to assist loyalist paramilitaries to move forward, it has emerged.
A plan to move loyalist groups towards politics has been shelved
The idea followed recent discussions between Downing Street and senior Ulster Unionists.
It is understood David McNarry and David Campbell met Tony Blair's chief of staff about moving paramilitaries from violence to "peaceful politics".
Loyalists, however, have not indicated a wish to cooperate with such a panel.
Following the discussions between the Ulster Unionists and Jonathan Powell, the government explored the creation of a three-strong panel as a way of improving communication with loyalist paramilitaries.
BBC NI political editor Mark Devenport said the panel would have consisted of Mr Campbell, who was recently elected as Ulster Unionist chairman, the Church of Ireland bishop Alan Harper and the Northern Ireland Office's former Security Director, John Steele.
This initiative followed a public appeal by Ulster Unionist leader Sir Reg Empey at his annual conference for loyalists to disarm and "call it a day".
However, after recent meetings within loyalism, the panel idea seems to have been shelved, with the paramilitaries concentrating on continuing their own internal consultations about how to respond to the IRA's decision to call off its armed campaign.