Erecting flags may not always be a criminal offence but it is wrong, Northern Ireland's most senior police officer has said.
Matt Baggott also called for an urgent review of the outdated code of conduct which deals with the contentious flags issue.
"The placing of flags in places where they are not wanted is sectarian; it is not acceptable; it is wrong. Flags placed to deliberately upset or offend others may not be criminal but it is most certainly wrong," Mr Baggott said.
The chief constable was addressing a meeting of the PSNI's oversight body, the Northern Ireland Policing Board.
In recent weeks hundreds of paramilitary flags have been put up on lamp posts lining main arterial routes in east Belfast. They were flown ahead of a centenary parade to mark 100 years since the foundation of the UVF (Ulster Volunteer Force) but, despite assurances from organisers, the flags have not been taken down.
Loyalists also sparked controversy by flying flags outside Holy Cross girls' school in north Belfast which was the scene of a bitter sectarian dispute in 2001 and 2002.
The Policing Board heard that although flags were not illegal, the act of erecting them could be considered a breach of the peace. However, Mr Baggott said officers had to weigh up whether intervening would create a greater disturbance.
"If there is a potential for greater breach of the peace or disturbance by police actions we will always put public safety first. That is our decision making policy. Flags on flag poles are matters for the roads service; they are matters for the council and others who at the moment are not involved," he said.
A flags protocol from the Office of the First and Deputy First Minister has not been reviewed since 2005. The chief constable said: "I am becoming frustrated and I know colleagues are. In the absence of anybody else doing anything the PSNI stepped into the gap and that in itself is controversial."
Speaking afterwards Sinn Fein's Gerry Kelly described the PSNI's lack of action over paramilitary flags as unacceptable. "The PSNI are saying it's not their job to take down flags but, it is their job to keep the peace. To take a policy of inactivity is not a policy at all," the north Belfast MLA said.