Loyalists were also told to provide the authorities with lists of their on-the-runs.
During negotiations ahead of the signing of the Good Friday Agreement, former Secretary of State Mo Mowlam gave verbal assurances to both loyalists and republicans about the fate of anyone wanted in relation to Troubles offences.
William 'Plum' Smyth is a former chairman of the Progressive Unionist Party and took part in the negotiations.
His party represented the views of the UVF and was involved in talks around loyalist prisoners.
Smyth said the assurance was given during a formal meeting with Ms Mowlam at Stormont early in 1998.
He said she assured those present there would be no legal pursuit of anybody wanted for offences committed before 1998.
This included loyalists, republicans, police or Army.
Mr Smyth yesterday told the Belfast Telegraph that loyalists were asked to draft a list of people they believed would be affected.
However, he said the issue centred predominately around republican fugitives as loyalists did not have the same access to boltholes in the Republic.
"We attended meetings with civil servants, the NIO and British Government," he told the Belfast Telegraph.
"We went to a meeting and were told to put together a list of loyalists we thought to be on the run.
"The first steps were made ahead of the Good Friday Agreement. It didn't really affect us, though, as we had no people on the run. Loyalists couldn't hide in the South, they couldn't go to America. We had no safe havens.
"That's why the on-the-runs issue didn't become a big problem. But on the pursuit of people for pre-1998 offences, it was quite clear there would be no prosecutions."
Smyth said he had no doubt the DUP leadership was fully aware of the move from the inception of talks around on-the-runs.
"For the DUP to say they didn't know is nonsense," he said.
"They weren't there during the Good Friday talks but they were being kept informed at the highest level by Mo Mowlam."