The SDLP has criticised new guidelines on community restorative justice schemes as a "political cop-out".
Schemes can see offenders meet victims
However, the guidelines have been welcomed by Sinn Fein and groups which run such projects in nationalist areas.
Draft proposals which set out standards for officially-sanctioned schemes have been published by the government.
The DUP described the proposals as flawed and said they had reservations about how the groups would operate and how their members would be selected.
NI Justice Minister David Hanson said the schemes, which seek to bring victims and offenders together, were "not an alternative to policing".
Mr Hanson said on Monday that both loyalist and republican groups should co-operate with the police.
"It is a mechanism whereby individuals can work with the community to tackle low level crime," he said.
"But it is not an alternative to policing."
"The draft guidelines make clear that the involvement of the PSNI is not negotiable."
The government is to consult on the guidelines over the next three months.
Northern Ireland Secretary Peter Hain said the government would only back the schemes if they adhered to what he called "strict police principles".
David Hanson's guidelines could be crucial to CRJ funding
However, the Policing Board said the government should not push ahead in this area until all political parties have endorsed the current policing structures.
Democratic Unionist MP Sammy Wilson, a member of the Policing Board, said: "The headlines simply don't reflect what is in the guidelines.
"One of the most disturbing elements of this is the level to which the proposals go to keep at arms length the PSNI in the whole restorative justice process just to suit republicans.
"The other thing that really disturbs me is the whole issue of vetting those involved in the schemes."
Alex Attwood of the SDLP said the government's restorative justice protocol "creates major political and policing risks".
Mr Attwood said: "The SDLP is strongly in favour of restorative justice. We are determined to get it right. But this protocol still gets things badly wrong.
"The new protocol has fundamental faults. The most fundamental is that there is no requirement for schemes and all parties to endorse policing. This is a political cop-out."
However, Sinn Fein called on the government to fund the schemes already in operation.
Sinn Fein's Gerry Kelly said: "Community restorative justice is not an alternative to a policing service.
"It never has been nor pretended to be."
The guidelines apply to "low-level criminal offences". The proposals state that it would not be appropriate to include more serious offences, including sexual offences or cases of domestic violence.
In addition, the guidelines do not relate to non-criminal matters or to "anti-social behaviour" which does not reach criminal level.
There are 14 community restorative justice schemes currently in operation in republican areas of Northern Ireland and five in loyalist districts.
Supporters of the schemes argue that they provide a positive alternative to paramilitary beatings.
However, critics fear that they could lead to the creation of a two-tier justice system.
BBC NI political editor Mark Devenport said the projects followed similar lines by seeking to bring victims and offenders together and making offenders undertake community work.
However, while the loyalist projects cooperate with the police, those in republican areas do not.
Under the proposals, the police will have to be informed if community restorative justice groups want to handle a specific case.
However in republican areas, there will be no obligation on those running schemes to contact police officers directly.
Instead, they can contact the Probation Board or Youth Justice Agency, which will pass a proposal by a community restorative justice group on to the police.
Alternatively, the proposal could be passed to an advisory panel featuring the PSNI and representatives of the scheme, Probation Board or Youth Justice Agency.
The police will then consider if there needs to be any action - such as fingerprinting - before referring the case to the Public Prosecution Service, which will ultimately decide if it should be handled by a community restorative justice scheme.
Under the government's proposals, the Public Prosecution Service must in reaching its decision take into account:
If there was an admission of guilt, confirmed by a police investigation.
The previous offending history of the offender; the gravity of the offence.
The views of the victim and other information considered relevant.
All the projects are currently funded privately, but that finance is expected to run out in the spring.
Agreement on government guidelines is being seen as crucial to obtaining official funding.