The Army has begun dismantling a number of security posts and bases in south Armagh following the IRA's statement saying it had ended its armed campaign.
The Army has started dismantling watchtowers (Army picture)
A base at Forkhill will close, while a watchtower at Sugarloaf Mountain and an observation post at Newtownhamilton police station will also be removed.
The British and Irish governments are considering the next steps to restore power-sharing in Northern Ireland.
An updated programme of "security normalisation" will be published soon.
Commenting on the posts' closure, the Army's general officer commanding, Lieutenant General Sir Reddy Watt, said: ''In light of yesterday's developments, the chief constable and I have decided that a further reduction in security profile is possible.''
Northern Ireland Secretary Peter Hain said a reduced military presence was one of a series of measures to be put in place.
He said that the ceasefire watchdog, the Independent Monitoring Commission, will report on progress made in October and again in January.
"In the meantime, we'll be taking forward a process of political negotiation, engagement and normalisation of policing and withdrawal of military support for the police," he added.
Such measures were put on ice after the failure to achieve a breakthrough leading to the restoration of devolution in 2003.
Sinn Fein has welcomed Friday's moves to dismantle watch-towers.
"The start made today must be built upon in the days and weeks ahead, not just in south Armagh but across the six counties," Newry and Armagh MP Conor Murphy said.
Sinn Fein President Gerry Adams told a news conference in Belfast on Friday that it was "now time for dialogue" between his party and Ian Paisley's DUP.
A soldier works on dismantling a watchtower (Army picture)
"It's a matter of whether the DUP has the confidence to enter into that dialogue - I think it's a matter of when, not if (that happens).
"There's no reason why, from our point of view, that can't start as quickly as possible and why we shouldn't be talking about the next steps in the rebuilding of the political institutions."
However, unionists have reacted angrily to the news of the Army posts being dismantled.
The DUP's Arlene Foster said it was "criminally irresponsible".
"It's startling that when the IRA give a statement saying they will stop what they should never have been doing, that the government acts so soon," she said.
The UUP's Danny Kennedy said it was outrageous that the government had "foolishly decided to act on IRA words alone".
The SDLP leader Mark Durkan said the British government's programme of security normalisation would have to be examined.
"That will have to be scrutinised by the Independent Monitoring Commission as well because that body also has a role in looking at what the governments are doing," he said.
The DUP is also demanding that pictures are taken of IRA weapons being destroyed as proof.
However, Taoiseach Bertie Ahern said he believed photographic evidence of IRA decommissioning was not necessary.
Mr Ahern told the BBC's Today programme on Friday it was "significant" that "witnesses from both traditions will be involved".
The British government also intends to introduce legislation in the autumn to allow paramilitary fugitives to return home.
In a statement released on Thursday, the IRA said it would pursue exclusively peaceful means.
The IRA statement said: "All volunteers have been instructed to assist the development of purely political and democratic programmes through exclusively peaceful means."
On Thursday, Prime Minister Tony Blair said the statement, ending 30 years of violence, was a "step of unparalleled magnitude".
Mr Hain said a return to devolved government at Stormont would not happen soon.
But - eventually - he would like to see the leader of the Democratic Unionists, the Reverend Ian Paisley, as the first minister.
Republicans had been under intense pressure to end IRA activity after the £26.5m Northern Bank raid in December and the murder of Belfast man Robert McCartney in January.
Political talks last year failed to restore devolution, which stalled amid claims of IRA intelligence gathering at Parliament Buildings, Stormont, in 2002.
The Provisional IRA's campaign of violence was aimed at forcing an end to the British presence in Northern Ireland, leading to a united Ireland.