Northern Ireland's Chief Constable today said he was happy with the £1 billion financial package secured for the devolution of policing powers to the region and was ready and willing for the move to go ahead.

Matt Baggott said the deal tabled by Prime Minister Gordon Brown gave him the ability to deliver effective community policing secure in the knowledge that outstanding bills facing the PSNI had been dealt with.

His backing for the cash offer came hours after another potential stumbling block appeared on the already rocky road toward devolving law and order responsibilities to Stormont, when the party earmarked for the new Justice Ministry said it would not accept the post until a strategy to tackle segregation north of the border was approved.

The cross-community Alliance Party said progress on transferring the powers from Westminster would not be possible until the Sinn Fein/Democratic Unionist-led coalition tabled its long delayed Cohesion, Sharing and Integration (CSI) document.

Stressing his intention not to comment on the political aspects of long running devolution saga, Mr Baggott told members of his oversight body - the NI Policing Board - that he was satisfied that the finances were in place if the move was given the green light.

He said from a professional perspective he would welcome devolution as it would enhance local accountability and decision making.

"I do believe that devolution is a step towards a safer, securer and more peaceful Northern Ireland," he said.

The chief added that the complex financial package addressed the "big ticket" issues that had been looming over the PSNI - such as the potentially massive compensation payout for former officers claiming damages for hearing loss sustained in firearms training and an estimated £100 million pressure on the police pensions scheme.

New direct access to Treasury funds to deal with any further escalation in the threat posed by dissident republicans was also an important aspect, he told the board's monthly meeting in Belfast.

"I do welcome the clarity and certainty of the financial package which of course is predicated against devolution," he said.

"It enables me to deal with the historical issues of the past such as the pension issues and hearing loss claims - whilst having an operational budget with sufficient flexibility and access to the security fund to take forward the ambitions of the Policing Board into the future."

The lack of financial settlement had been seen as one of the last obstacles in the way of devolution with Democratic Unionists insisting they would only give their support if No 10 stumped up the cash required.

However, while DUP First Minister Peter Robinson has now accepted the cash offer, he has made clear other so-called confidence building measures are still required before he gives his backing.

Foremost among these, according to the DUP leader, is a need to reform how the issues of contentious Orange Order parades are managed.

This stance has angered his Sinn Fein partners in government, with republicans accusing the unionists of inserting new preconditions into negotiations as a way of stalling the move to placate hard-line opposition inside and outside the party.

Another sticking point emerged today when Alliance party member Anna Lo indicated that her party would not fill the Justice Ministry until the CSI was dealt with.

The Executive's so-called Shared Future strategy has been held up over a continuing failure between the two major parties to agree its form.

In a clear bid to heap pressure on the DUP and Sinn Fein to progress the issue, Ms Lo said she and her colleagues needed to see action before they came on board in regard to policing devolution.

As part of the deal to devolve law and order powers to Stormont, Mr Robinson and Sinn Fein Deputy First Minister Martin McGuinness agreed that their respective parties would not take the new ministry. Instead it would being given to a candidate who had cross-community support in the Assembly.

As the only major party that does not align itself with either the nationalist or unionist tradition, Alliance is the only feasible occupant.

The party, which is not a member of the four-party power-sharing executive, has now made clear that its co-operation will not come without progress on segregation - which it claims costs Northern Ireland £1 billion a year.

"It would be nearly impossible for progress to be made on issues such as policing and justice if we don't have a shared future strategy agreed urgently," said Ms Lo.

The South Belfast member added: "We often hear of big ticket issues at Stormont. Well, these are not just big ticket, they are matters that, if left ignored, will continue to be big bill issues for Northern Ireland.

"The bill for segregation hits the Stormont doormat every financial year and it is around £1 billion annually. The bill for failing to produce a CSI document is massive because you only have to think of the policing costs of sectarian violence and the cost to our economy of negative coverage of Northern Ireland in the media.

"Think of the whirlwind of bad publicity worldwide over the intimidation that forced Romanian families out of their Belfast homes (in June).

"The Executive cannot afford to duck these issues any longer. We are in the teeth of a financial crisis and addressing the cash wasted on maintaining division is the best way to safeguard vital frontline health services in the future.

"We also need to put Northern Ireland in the shop window more effectively to boost our economy. To do this the Executive needs to produce CSI strategy to show that they are doing all they can to eradicate prejudice and make people and businesses from around the world feel at home here."

In September, Northern Ireland's outgoing police chief Sir Hugh Orde also accused the Stormont administration of not doing enough to tackle traditional divisions in the region.

He said the authorities had to do more to address the underlying causes of conflict and tension, claiming the Shared Future document had been left on the back burner.

Unrelated to the devolution issue, earlier this year the PSNI had been told by the Government to make £17 million efficiency cuts in the next 12 months as part of a public sector wide rationalisation programme.

Both the board and the PSNI had raised concern about the potential impact of the such a move with the Northern Ireland Office.

Today Board chair Barry Gilligan revealed that while the NIO had held firm on the need to find £17 million in savings, they had agreed that they could now be achieved over a two year period.

DUP Assembly member Jeffrey Donaldson tonight acknowledged that the issue of the CSI strategy had to be addressed.

However, the Lagan Valley representative said the failure to do so was not the fault of his party, accusing Sinn Fein of not working with him and his colleagues to produce an agreed document.

"Anna Lo's comments are reflective of the fact that there are a whole range of issues of concern to people right throughout our community," he said.

"These issues need to be addressed in the context of devolving policing and justice powers: it is foolish to pretend otherwise."

He added: "The DUP sat down in good faith for a substantial period of time to develop the CSI strategy. Discussions around this issue were ended, not by the DUP, but by Sinn Fein. Instead of finalising the details of this work in October 2008 Sinn Fein decided to take eight months out and produce their own document.

"Sinn Fein needs to step up to the mark in playing their part in building a shared future in Northern Ireland. If we are to tackle issues like racism and sectarianism and work to remove the divisions in our society, we need a shared strategy to achieve this.

"The peace walls will not come down whilst Sinn Fein persist with a mistaken belief that a shared future is created by imposing their template rather than a template based on a broad consensus."