NI Secretary Shaun Woodward made the comments on the BBC
The Secretary of State has ruled out a £12,000 payment to all families bereaved as a result of the Troubles.
The proposal, from a report compiled by the Consultative Group on the Past, was criticised by some victims' families.
Secretary of State Shaun Woodward said it was clear the "time is not right for such a recognition payment".
Speaking in London, the groups co-chairs, Lord Eames and Denis Bradley, said their report was "more important than one recommendation".
Mr Woodward told the BBC: "I have decided however we proceed on this report, and there are many things I would like to consider in it. But I do not think I will be proposing that this particular recommendation is one we should go forward on.
"There isn't a consensus on it; it is an interesting idea, but very clearly the time is not right for a recognition payment."
While it has obviously caused controversy in Northern Ireland, people ought to calm down and look beyond it to what else we are saying
Mr Woodward said while some parts of the report had caused huge controversy, there were 31 recommendations "which really do bear looking at".
Lord Eames said he was encouraged by the indication that the government was "going to take the other recommendations and have a good look at them".
"I have a feeling, whenever the dusts settles on all of this, there will be a case, maybe years down the line when people will start talking again about some tangible recognition," said Lord Eames.
"This arose from our consultation process, we didn't pluck it out of thin air, we didn't imagine it.
"While it has obviously caused controversy in Northern Ireland, people ought to calm down and look beyond it to what else we are saying."
The Consultative Group on the Past is an independent group set up to deal with the legacy of Northern Ireland's Troubles, during which more than 3,000 people died.
It was proposed that the families of paramilitary victims, members of the security forces and civilians who were killed would all be entitled to the same amount.
The 190-page report, which contains more than 30 recommendations, went to the government for consideration last month.
Regarding the group's comments about public inquiries, Mr Woodward said: "I'm looking forward to the Saville Report (on Bloody Sunday). It's incredibly important, but this can't be the only way of dealing with it.
"Eames and Bradley rightly put their finger on the fact that there must be a better way of dealing with these issues than public inquiries."