Secretary of State Theresa Villiers says she has no intention of banning next weekend's republican parade in Castlederg, despite strongly condemning it.
She said that she had taken advice on how to proceed.
Ms Villiers couched her thoughts on the march in terms like "at this time", which seemed to leave open the possibility of a review.
She stated "a key factor in deciding whether a ban would be appropriate is that whether the PSNI are able to cope with policing the parade, and they have every confidence that they can.
"So, for the moment, I have no intention of exercising a power to ban this parade."
Ms Villiers said: "I think it is unhelpful and regrettable that this parade is happening and I can well understand why people feel offended by it, but that is not enough to trigger a legal ban on the parade taking place."
She told the Belfast Telegraph: "While I am concerned about the parade and I fully appreciate the distress it must be causing to victims and to much of the unionist community, this is not an instance where the legal powers to ban parades actually apply."
She was reacting to demands led by Ulster Unionist Party leader Mike Nesbitt that she should ban the commemoration.
The parade marks the anniversary of the deaths of IRA men Seamus Harvey and Gerard McGlynn, who were 23 and 20 respectively when the bomb they were transporting to the town detonated prematurely on August 11, 1973.
Harvey had been acquitted of IRA membership just a fortnight earlier. Both men came from Castlederg, but died just across the border in Donegal.
It had originally been planned to pass though the town centre.
The parade's organisers offered to voluntarily reroute it away from the Cenotaph and the Methodist church in the town, but the Parades Commission ordered it to stay outside the town centre altogether.
This has not assuaged the anger of unionists and the families of IRA victims.
"Castlederg was once known as the most bombed town in Northern Ireland where 29 lives were lost as a result of terrorist actions," Ross Hussey of the UUP said.
Thomas Buchanan of the DUP said that the parade highlighted that most of the killings were unsolved.
He added: "It is possible that some of the people responsible for those murders, but who have up until now evaded justice, will be parading past the sites of their dastardly and murderous crimes." There are now plans for protests along the route.
The Parades Commission, which adjudicates on contentious parades and protests, cannot ban a parade outright, it can only impose restrictions.
However Ms Villiers, as the representative of the British Government, has the power to do so in an emergency. Ms Villiers, who is a lawyer, has taken advice from officials and the police.
She said: "It is vitally important to ensure that the day passes off peacefully because there are serious risks to Northern Ireland that come with further disorder. Trouble is damaging economically and it also creates significant risk for police officers.
"Public disorder, whoever generates it, tends to lead police officers into situations where they are at greater risk of terrorist attack."
Tyrone Volunteers Day is an annual event which commemorates 56 IRA members and three Sinn Fein members from the county who died during the Troubles. This year it focuses on two men, Seamus Harvey and Gerard McGlynn, who were on their way to bomb Castlederg when their bomb blew up prematurely and killed both of them just across the border in Co Donegal.
There was unionist outrage when it emerged that the event is to be held in Castlederg. The Parades Commission has rerouted the parade away from the town centre.