The government is to spend £104,000 to help the Orange Order in Belfast develop the Twelfth of July as a major tourism event.
It is hoped 12 July will become a family event
It said it was disappointed that those who did not feel comfortable with parades would abandon the city centre during the marching season.
The money, to be paid over three years, will fund a development officer who will promote the day as a festival.
It is hoped it will become a family friendly, fully-inclusive "Orangefest".
Social Development Minister David Hanson said he hoped the money would help to regenerate Belfast.
"There are very many negative perceptions about the Orange Order and the Parading Season - I understand why those are the case," he said.
"What we are trying to do over this three-year period is to help support the Order to mitigate against those negative perceptions - to talk to shopkeepers, to talk to local residents groups and assist with, I hope, the promotion of the city of Belfast."
Sinn Fein assembly member Alex Maskey, a former lord mayor of Belfast, criticised the funding move.
"This is entirely the wrong decision. It is unacceptable that the British government should fund an organisation which continues to force its anti-Catholic parades through Catholic areas," he said.
"The Twelth of July for many nationalists in Belfast represents domination and sectarian violence."
However, Orangeman William Humphrey, who is vice-chair of the Belfast County Grand Master's Advisory Committee, said there was "huge potential" to develop the Twelfth parades to bring in visitors.
"This is one of the largest tourist attractions in Northern Ireland and one of the largest festivals in western Europe," he said.
"The (Orange) Institution is interested in the civic life of this city, because we are key stakeholders in it, with thousands of members and tens of thousands of supporters.
"It is in our interest that Belfast is a success story."
The author of the Lonely Planet Tourist Guide to Ireland, Fionn Davenport, said those hoping to make the Twelfth a tourist magnet would face an uphill struggle.
"It's not very inviting or inclusive and I think that's the general impression," he said.
"Rightly or wrongly, it's seen as a militaristic expression with none of the criteria of a happy friendly carnival day out."
The Orange Order is the largest Protestant organisation in Northern Ireland with at least 75,000 members, some of them in the Republic of Ireland.
Its origins date from the 17th century battle for supremacy between Protestantism and Catholicism. Prince William of Orange, originally of the Netherlands, led the fight against Catholic King James.