The UDA has done itself an enormous amount of damage following recent violence in Carrickfergus and Bangor, UUP leader Sir Reg Empey has warned.
Up to 200 people were involved in the rioting
Sir Reg has previously met UDA members to persuade them to give up violence.
Calls to scrap a £1.2m regeneration scheme followed Wednesday's trouble, which saw police officers attacked.
"If it had been republican gunmen firing at the police, then today the executive would be in ruins," he told the BBC's Inside Politics.
"There's no question that it is unacceptable and cannot go on, but I do know that there are many people in that organisation who are trying," he said.
Sir Reg said the question of funding would have to wait until Social Development Minister Margaret Ritchie returned from holiday.
He added: "I don't doubt for one minute that she will be looking very closely at this, and I think the organisation has done itself an enormous amount of damage."
Ms Ritchie has said she will be seeking the views of PSNI officers about who was behind Wednesday's disturbances in Bangor.
One of the cars set alight during the violence
Six people were struck with baton rounds during the violence on the Kilcooley estate.
Officers also came under attack from petrol bombs, stones and fireworks. A number of cars were also set alight.
Last month in Carrickfergus, a police officer was shot during a stand-off between rival UDA factions.
On Friday, First Minister Ian Paisley said: "It is absolutely imperative that every step is taken to ensure that all the remnants of paramilitarism are removed from society."
The DUP leader said he would be meeting government officials to ensure paramilitaries were given no concessions.
The UDA-linked Ulster Political Research Group insists the package is not going to the paramilitary group and is being administered by the separate Farset Community Enterprises.