Torrens Knight was released early under the Good Friday Agreement
TUV leader Jim Allister has said no action will be taken against a party member who organised a petition in support of a convicted murderer.
Trevor Collins collected signatures in support of Torrens Knight, who was convicted of the Greysteel massacre.
Knight was released early under the Good Friday Agreement, but was sent back to jail after he was convicted of assaulting two sisters in Coleraine.
Jim Allister said he did not support Mr Collins, but would not suspend him.
"The TUV is not associated with or involved in promoting the release of Torrens Knight," he said.
"I believe Mr Collins has acted in a misguided fashion, and I've made that claim to him.
"But let's keep our feet on the ground here.
"There are people released from jail who were convicted of crimes in which people died and today they sit in our government."
Mr Collins, a businessman from Garvagh, had been collecting signatures seeking the release of Greysteel murderer Torrens Knight.
Knight served seven years for taking part in the Greysteel massacre in 1993 and for killing four workmen in Castlerock earlier the same year.
His licence was suspended by Secretary of State Shaun Woodward who said Knight's convictions for assault and disorderly behaviour demonstrated that he had "breached the terms of his life licence" and presented "a risk to the safety of others".
Sentence Review Commissioners will now determine if the early release licence granted to Knight in July 2000 should be revoked.
Mr Collins said while he did not condone the murders carried out by Knight, he did not think he should be made to serve his full sentence.
"I did not agree with what happened in Greysteel or Castlerock, but from he was released I know this man has changed," he said.
"He never was a real bad person, but the Troubles in Northern Ireland provoked many a young man to do things that they wouldn't have done in normal circumstances."
TUV leader Mr Allister said he had not been asked to sign the petition. A spokesman for the party said there were no plans to revoke Mr Collins' membership.
SDLP assembly member John Dallat said he was disgusted by the petition.
"While I note that the TUV has distanced itself from the petition, I would have thought that they would throw the organiser, Trevor Collins, out of the party if they really believe so strongly that all early release prisoners should be behind bars," he said.
"No one should be in any doubt that the only place for Knight is back in jail where he does not constitute a danger to the public."
Eight people were shot dead when the UFF opened fire inside the Rising Sun bar in the County Londonderry village of Greysteel at Halloween 1993.
One of the gunmen shouted "trick or treat" before opening fire on customers.
In 2005, another of the Greysteel killers, Stephen Irwin, who had also been released early under the terms of the Good Friday Agreement, was convicted of slashing a football supporter with a knife during an Irish Cup Final football match.
He was returned to prison and his licence was revoked.