Ulster Unionist Party leader Mike Nesbitt has recommended that the party withdraw from powersharing in Northern Ireland in light of recent claims the Provisional IRA still exists.

His recommendation is likely to be ratified by the UUP ruling body in a vote on Saturday.

Mr Nesbitt said Sinn Féin has no credibility and the UUP has no trust. 

The Ulster Unionists hold one seat on the Executive, Regional Development Minister Danny Kennedy. Mr Nesbitt said he would be resigning next week.

While the move by the UUP, a minor partner in the five-party mandatory coalition, will not automatically trigger the collapse of the administration, it does throw its future into serious doubt, as pressure will now mount on the largest party, the Democratic Unionists, to follow suit.

Deputy First Minister Martin McGuinness said the UUP decision is more about inter-unionist rivalry than "feigned concern" about Sinn Féin's commitment to peace.

Mr Nesbitt said the recommendation to withdraw was based on a matter of principle and based purely on the murder of Kevin McGuigan in east Belfast two weeks ago.

He said the party would not stay in the executive when the "IRA are murdering and Sinn Féin are ignoring it".

He said the UUP had stretched itself almost to a breaking point to bring forward the Good Friday Agreement in 1998 and now learns that the IRA still exists with a command structure at a senior level and the "best that Sinn Féin can do is trot out tired old rhetoric".

"That decision is to withdraw from the Northern Ireland Executive, to form an opposition and offer people an alternative, as is the way in any proper democracy.

"We are in a bad place but this can be fixed.

"But the IRA need to go away and stop terrorising their own communities."

Minister for Foreign Affairs Charlie Flanagan said: "I respect the right of the UUP Executive to make its own judgements in regard to participation in the devolved Northern Ireland Executive.

“However, I firmly believe the interests and welfare of the people of Northern Ireland are best served by an inclusive power-sharing Executive, as envisaged in the Good Friday Agreement.”

Mr Flanagan said he and Minister for Justice Frances Fitzgerald will meet with Northern Ireland Secretary Theresa Villiers early next week.

Yesterday, Ms Fitzgerald asked the Garda Commissioner to conduct a "fresh assessment" of the activities of the Provisional IRA in light of the PSNI investigation into the murder of Mr McGuigan.

Ms Villiers said the UUP took its own decisions.

She added: "The Government remains fully committed to the devolved political institutions and to the implementation of the Stormont House Agreement."

That deal has been stalled by a political fallout between Sinn Féin and the DUP.

Ms Villiers said that she would be continuing discussions with parties about the impact of the murder of Mr McGuigan.

The US administration this evening issued a statement about the political instability.

Retired Senator Gary Hart, who was appointed to a role in Northern Ireland Affairs by US Secretary of State John Kerry, encouraged all the Stormont parties to continue to engage in dialogue to sustain and improve the functioning of Stormont. 

He also said the US strongly supports the devolved institutions created by the Good Friday and St Andrews Agreements.

In 2008, an Independent Monitoring Commission appointed by the Irish and British governments to verify arms decommissioning by republicans and loyalists said the IRA had disbanded.

However, at the weekend PSNI Chief Constable George Hamilton said parts of its structure were still in place for a radically different purpose from the 1990s.

Mr Nesbitt said this afternoon: "We must give consideration as to whether we need a new form of Independent Monitoring Commission that can take an independent look at the situation and give us confidence about what is going on out on the streets."

In a column to be published in the Andersonstown News, Sinn Féin President Gerry Adams said: "Unionist politicians ignored the bits that didn't fit with their narrative and jumped on Hamilton's claim that the IRA still exists to ratchet up the crisis.

"...Sinn Féin has no responsibility whatsoever for those who killed Kevin McGuigan or Jock Davison ... Sinn Féin has no special, or particular or specific responsibility to respond to the allegations made about the IRA..."

Speaking on RTÉ's Today with Keelin Shanley earlier, Sinn Féin MLA Gerry Kelly said a political crisis is being created around the difference of opinion that the IRA still exists in some form but not as a military organisation.

He said there is the possibility that some former members of the IRA may be involved in criminal activity, but this is not the IRA, it is people acting in a criminal way.

He said the IRA made a statement ten years ago that it had "left the stage" and he believes it has.

Yesterday, Ms Fitzgerald asked the Garda Commissioner to conduct a "fresh assessment" of the activities of the Provisional IRA in light of the PSNI investigation into the murder of Mr McGuigan.

In a statement, Ms Fitzgerald said: "Recent developments are of considerable concern but what we need to do now is establish all the current facts and that is what is happening in the rigorous investigation being carried out by the PSNI."

She added: "As was clear from what the Chief Constable said at the weekend there are no simplistic answers about the continued existence of PIRA."

Mr Kelly accused the minister of going beyond her remit in asking for the assessment.

He said if she has any evidence to support her statement she should have brought it to An Garda Síochána instead of instructing the Garda Commissioner.

McDowell says governments allowed IRA to exist

Meanwhile, a former minister for justice has said the Irish and British governments decided to let the Provisional IRA continue rather than risk a rise in splinter paramilitary groups.

Michael McDowell, who was minister for justice from 2002 to 2007, said both governments feared that a dissident group would fill the void left by a disbanding of the Provisional IRA.

Writing in the Irish Times today, Mr McDowell said the governments felt that an "inert" IRA would become a harmless group rather like the old IRA and this would be the lesser of two evils.

Since the murder of Mr McGuigan in Belfast two weeks ago, attention has been focused by politicians north and south of the border on the status of the IRA.

Sinn Féin TD Brian Stanley yesterday said the party welcomed the review, which he said would show the IRA had stood down and did not exist.

Mr Stanley said there may be other groups masquerading as "some kind of IRA" such as the Real IRA or the continuity IRA but they should disband and go away as they had no contribution to make.

Tánaiste Joan Burton said she understands that the garda assessment will be carried out within a reasonable period.

She said it is now known that some people previously involved in the IRA are "morphing" into people involved in criminality and racketeering along with codes of silence and "omerta", which she said fills her with trepidation.

Ms Burton said there was a movement towards Mafia-style organisations, which damage communities.

Analysis: Northern Editor Tommie Gorman

This is a very significant development. My instinct is Mike Nesbitt will get full backing on Saturday when the ruling party votes on Mr Nesbitt’s recommendation.

Peter Robinson is on holidays at the moment but when he returns the focus will then turn to the DUP and it is hard to see how the DUP cannot follow suit.

I can see Stormont being suspended. This is new, new territory for Teresa Villiers as Secretary of State.

This is the reality: One unionist party is withdrawing from government, the other one is likely to do so.

All of the parties up North and indeed the parties of Government down south are going to have to be part of the effort to find a solution.

If Stormont is suspended the political tension will increase, there’ll be a vacuum.  The UK and Irish governments will then have no option but to step in.

The sum result is further uncertainty and further instability.