The Taoiseach has said he accepts the main findings of the report by the Independent Monitoring Commission that leading members of Sinn Féin were also leading members of the Provisional IRA.
Bertie Ahern has described the IMC report as extremely disturbing and worrying.
The British government says sanctions will be imposed on Sinn Féin and the Progressive Unionist Party in response to continuing IRA and loyalist paramilitary violence.
The Northern Secretary, Paul Murphy, said the funding that the parties receive from the British government will be cut.
The Sinn Féin president, Gerry Adams, has rejected the commission's report, which he claimed was partisan and a sham.
Mr Adams said Sinn Féin would challenge the report by every means at its disposal.
The commission's report, published this afternoon, highlights the recent levels of paramilitary activity by both republican and loyalist groups.
The four-man monitoring commission is part of a plan by the two governments for restoring devolution, which was suspended in October 2002 amid allegations of IRA intelligence-gathering at Stormont.
Following the publication of the report, the British government announced it accepted the commission's conclusions and recommendations. It said the conclusions painted a 'disturbing picture in relation to paramilitary and criminal activity'.
In a statement, it said it acknowledged the 'constructive contributions' made by various parties in advancing the peace process to this point, but said that the transition to exclusively democratic means must be completed.