British Northern Secretary Shaun Woodward says the loyalist ceasefire is to be recognised by the despecification of the Ulster Volunteer Force and Red Hand Commandos.
The announcement, made by Mr Woodward in the House of Commons this morning, means that UVF prisoners could now be eligible for early release.
The British government had ceased to recognise the UVF's peace commitment in September 2005 following a loyalist feud.
A British government spokesman told RTÉ News that the despecification was an acknowledgement that progress had been made on ending paramilitary activity, but that further progress is needed.
However the Northern Secretary said the dissident republican group Óglaigh na hÉireann was now proscribed after being found to be involved in terrorism.
