BBC NI Home Affairs Correspondent
The plan is understood to have delivered millions of pounds of funding in return for UDA guns
It has emerged that an intiative steered by the husband of the Irish president is being blamed for the UDA's failure to fully decommission.
Martin McAleese approached the British and Irish Governments and the NI Executive for millions of pounds of funding for UDA controlled areas.
It is understood decommissioning stalled because of a perceived failure to deliver the money promised.
Mr McAleese has a well known relationship with senior UDA figures.
He is understood to have held a series of meetings with Jackie McDonald and other UDA leaders to discuss their concerns about working class loyalist communities.
As a result, he drew up an action plan and asked the Northern Ireland Office (NIO) to contribute £5m to a project aimed at regenerating loyalist areas where the UDA has a strong presence.
He said this would be matched by the Irish government. The Irish foreign minister, Micheal Martin, is believed to have attended one of Mr McAleese's meetings with senior UDA figures.
The aim of the 20 page action plan refers to the need to "exploit the opportunity to build a new and positive future for everyone that underpins and consolidates the peace process."
The BBC understands the president's husband was told by the NIO that it wouldn't be possible to supply the funding and that such a project would be a matter for the Stormont executive.
Mr McAleese then asked the Office of the First Minister and Deputy First Minister to provide the funding but they apparently refused, telling him regeneration projects must be cross community and based on need.
That is believed to have led the UDA to renege on an agreement it had with other loyalist groups to decommission its weapons.
It's understood republicans supported attempts to bind loyalists into the peace process but did not believe money was the solution.
A senior republican source told the BBC that the initiative was viewed as an attempt by the UDA to sell its guns, which the republican movement would not accept.
Martin McAleese, who travelled to Brussels this week with Jackie McDonald and others, is now believed to be seeking European funding for a modified proposal which includes a total of ten areas - five loyalist and five nationalist.
In a statement, the Department of Foreign Affairs in Dublin said it would continue to support Mr McAleese's efforts.
"Mr McAleese's outreach initiatives with the loyalist communities have been very helpful in consolidating peace and reconciliation in Northern Ireland," a spokesperson added.
The Northern Ireland Office confirmed that such community funding would be a matter for OFMDFM.
"The government is aware of Martin McAleese's interest in community development in loyalist areas," an NIO spokesperson said.
"The issue of decommissioning is a separate one and we are encouraged by the progress made by the UDA to date. We are confident that decommissioning will be completed by February 9 when the legislation comes to an end.
"Anything to do with community development is a matter for the devolved administration and not the NIO."