Social Development Minister Margaret Ritchie has announced her intention to stop a loyalist initiative which was to get £1.2m of government funding.
Margaret Ritchie had set the UDA a 60-day deadline
However, at the Northern Ireland assembly Finance Minister Peter Robinson accused her of being in breach of the ministerial code.
A 60-day deadline for the Ulster Defence Association to begin giving up guns expired last Tuesday.
The deadline was set in August after repeated violence linked to the UDA.
However, the UDA said it would adhere to its own timetable for getting rid of its weapons.
In a statement to the assembly, Ms Ritchie said the actions of the UDA had meant the retention of the Conflict Transformation Initiative originally proposed by Peter Hain could not be justified.
"The UDA's fractious nature means, at this time the organisation is unable to meet the objectives of the CTI (Conflict Transformation Initiative).
"The CTI project can no longer be justified and I propose to end it immediately," she said.
After Ms Ritchie finished her statement, Mr Robinson claimed she had "ignored" the government's own legal advice and "might be acting beyond her legal powers".
The assembly suspended its sitting for about half-an-hour whilst legal advice was sought on the matter.
BBC Northern Ireland Political Editor Mark Devenport described the scenes in the chamber as "extraordinary".
"After its honeymoon period," he said, "there have been a number of rifts within the executive, over issues like the Irish language and gay rights.
"However, the evident division between the SDLP minister and her colleagues is the most bitter and personal split within the executive since devolution was restored."
Ms Ritchie has said she came under pressure from direct rule ministers to compromise on her deadline.
However, Security Minister Paul Goggins said the final decision on whether to redirect £1.2m from the Conflict Transformation Initiative to other loyalist projects was hers.
Chris McGimpsey of Farset, the organisation which was administering the project, said Ms Ritchie's decision would be counterproductive.
The UDA insists it will decommission in its own time
"It's not a UDA issue - what we have here is a number of loyalist working class communities which are suffering from social deprivation," he said.
"I have no love of the UDA - they've threatened to kill me twice - but Farset has been going for 25 years and has a fairly good press in both communities, trying to administer funds into areas where the UDA and other paramilitary groups are strong in an effort to seduce people away from paramilitarism.
"What you have is the minister pulling the rug from under our feet, saying that by reducing funding in these communities she will reduce paramilitarism - the exact opposite is the case."