Dissident republicans remain highly dangerous, according to the body which monitors paramilitary activity in Northern Ireland.
The Independent Monitoring Commission said although they posed a serious threat, they were not able to mount a substantial terrorist campaign.
It was the watchdog's first report since the murders of two soldiers and a police officer in March.
It examined paramilitary activity in the six months prior to the murders.
Although the report covers the period from September to February, the watchdog commented on the political impact of the murders.
Mark Simpson, BBC Ireland correspondent
Dissident republicans are not just trying to kill members of the security forces, they're training, recruiting and trying to buy more weapons.
They're also involved in drug dealing, tiger kidnappings, robbery, extortion and brothel-keeping.
According to the independent report published today, groups like the Real IRA and Continuity IRA are ruthless and highly dangerous.
But they're small, and don't have the capacity to mount a consistent and substantial campaign of violence.
Their attempts to wreck the process have so far failed but, the report warns, they seem determined to strike again.
"The current ongoing violence is an attempt to destroy the peace process and return the community to the period of the violent struggle from which it has so painfully and relatively recently emerged," it stated.
"Dissident republicans are attempting to deflect the PSNI from maintaining community policing and so disrupt the increasing community acceptance of normal policing.
"There is also a hope that sufficient violence would provoke an over-reaction by the authorities, which would play into their hands.
"In our view, however, this is a challenge and a testing of the peace process by the people who have always been violently opposed to it. It does not represent an unravelling of the peace process."
The watchdog found that in the months prior to the murders, the Continuity and Real IRA were both increasing their level of activity, resulting in a more concentrated period of attacks than at any time since the IMC published its first report five years ago.
This activity included the targeting of members of the security forces, recruitment and attempts to buy weapons, the commission said.
The report said the groups were also engaged in a wide range of criminality, including drug dealing, robberies and running brothels.
Turning to loyalists, the commission said both the UDA and UVF needed to do more to address the issue of decommissioning.
The commission said there was a growing acknowledgement among the leaders of the UDA and UVF that decommissioning would have to be addressed.
Of the mainstream UDA, the commission said: "We do see some signs that the challenge of decommissioning of weapons is now being faced as it had not been hitherto and that there has been some movement towards the point where it might be possible to act.
"However, because of the state of opinion in the UDA, the uncentralised nature of the leadership and their search for a quid pro quo for decommissioning, it is somewhat difficult to judge what turn events may take and when."
The commissioners said parts of the UVF leadership increasingly recognised that they must tackle decommissioning, "especially since the February 2010 (or possibly autumn 2009) deadline on the continuation of decommissioning legislation which the secretary of state has announced".
"It will soon be apparent whether it has become a deliverable option," they added.
The report said loyalist paramilitaries continued to engage in criminality and questioned why parts of the UDA appeared to be continuing to recruit members, albeit on an ad hoc basis.