The Independent Monitoring Commission has said the IRA's army council no longer operates and serves no function.
It says the IRA has relinquished the leadership and structures it used during the troubles.
The DUP has said the army council must cease to exist before policing and justice powers can be devolved.
In a report given to the British and Irish governments, the IMC says it does not expect an announcement from the IRA that the army council will disband.
"We are aware of the questions posed about the public disbandment of (Provisional Irish Republican Army's) PIRA's leadership structures," the report said.
"We believe that PIRA has chosen another method of bringing what it describes as its armed struggle to a final close.
"By taking these steps PIRA has completely relinquished the leadership and other structures appropriate to a time of armed conflict"
"Under PIRA's own rules the army council was the body that directed its military campaign.
"Now that that campaign is well and truly over, the army council by deliberate choice is no longer operational or functional.
"This situation has been brought about by a conscious decision to let it fall into disuse rather than through any other mechanism."
The report concluded: "The mechanism which they have chosen to bring the armed conflict to a complete end has been the standing down of the structures which engaged in the armed campaign and the conscious decision to allow the army council to fall into disuse.
"By taking these steps PIRA has completely relinquished the leadership and other structures appropriate to a time of armed conflict."
Speaking at Hillsborough Castle, Secretary of State Shaun Woodward said the report was "ground-breaking".
"The IMC makes clear that the army council is now redundant," he said.
"I urge people to read the report very carefully.
"As the IMC made clear, 'the leadership structures have definitely ceased to function in the way they did during the time of conflict'. Today's report confirms this has happened."
Unionists have said political progress is being blocked by the IRA's failure to completely disband.
Peter Robinson, the DUP leader, has said he will not meet republican demands for the devolution of policing and justice powers to Stormont until the IRA is finally at an end.
He said: "I don't believe that we are in that position. We require the removal of the IRA's army council and we've always made that clear."
The DUP and Sinn Fein leaderships are expected to meet for talks on Thursday.
Political tensions
They are hoping to avoid a major crisis over the future of the power-sharing government and are divided over such issues as the devolution of justice powers, education reform, the future of the Maze prison site and the promotion of the Irish language.
The foundations for power-sharing between the DUP and Sinn Fein were laid at the St Andrews political deal of 2006, and identified May of this year as a target date for the transfer of justice powers.
But the DUP has insisted it will not budge until the circumstances are right. Sinn Fein has threatened to pull its ministers out of the Stormont cabinet if progress is not made soon.
BBC Ireland correspondent Mark Simpson said it is hoped the new report will help ease the current tensions at Stormont, where the power-sharing executive has not met for almost three months.
^ Back to top | BBC Sport Home | BBC Homepage | Contact us | Help | ©
~RS~q~RS~~RS~z~RS~29~RS~)