The government has asked the 19 current members of the Policing Board to continue to serve into next year.
Professor Desmond Rea is the chairman of the Policing Board
NI Secretary Peter Hain said for reasons of stability and continuity he wanted members to continue for a period ending no later than October 2006.
The DUP wanted a complete revamp of the board to reflect its strong showing in the last election, whilst the SDLP was in favour of an extension.
The terms of office of all board members were due to expire in October.
The board is comprised of nine independent members and 10 drawn from the political parties.
Mr Hain said he hoped the board, which holds the PSNI to account, could be reconstituted before October 2006.
He added: "I am well aware of the different positions from the parties on this issue.
"However, my overriding concern during these deliberations has been that the board, which successfully fulfils a vital role in policing accountability arrangements, is provided with stability and continuity to continue its important work. "
Mr Hain added: "All parts of the community must support the work of the Policing Board and I pay tribute to the board's continued commitment to their role in ensuring that the PSNI is effective, efficient and accountable to community."
The current Chairman, Professor Desmond Rea, and Vice Chairman, Denis Bradley are to continue in their roles.
Mr Rea said the board would remain focussed on supporting the PSNI, holding it to account through the chief constable, and making arrangements for obtaining the co-operation of the public with the police.
The SDLP's Alex Attwood welcomed the secretary of state's decision as the "right" one.
Mr Attwood said: "The announcement yesterday by the British government revealed how it is the IRA who have held up normalisation given that what was announced yesterday was agreed and published over two years ago.
"Despite the efforts of Sinn Fein and the IRA to hold up policing over the same period, they have failed, and failed miserably.
"Sinn Fein should cut their loses on policing and join us in implementing far reaching policing change."
However, the DUP's Sammy Wilson said it was a disgrace that the board no longer accurately reflects Northern Ireland's political landscape.
"This is dictatorship over democracy," he said.
"It's political bias over fairness and it is an attempt by the government to ensure that it has got a board which will drive through the agenda which is required to placate Sinn Fein on policing.
"We are sick and tired of these slaps in the face to our community while he (the secretary of state) bends over backwards for a bunch of terrorists."
In a statement the DUP's Policing Board members said their party's co-operation on the board "cannot be taken for granted".
The Northern Ireland Policing Board was established in November 2001 following recommendations in the Patten Report.