The Government should address fears over growing evidence of a UDA role in the murder of Kevin McDaid, the SDLP has said.
The party's East Londonderry MLA John Dallat said loyalists should be pressed to disarm but also to end sectarian attacks before funding is passed to UDA-linked groups.
Ten people have been charged over the murder of Mr McDaid (49) and the attempted murder of Damian Fleming (46) in a sectarian attack in Coleraine, Co Derry, in May.
Police giving evidence at court hearings linked to the case have pointed to UDA involvement in the attack.
“It is now clear that the PSNI has had a change of opinion from the one expressed at the time of the murder by Assistant Chief Constable Alistair Finlay who refuted any UDA involvement,” said Mr Dallat.
“From the day and hour that this terrible deed was done it was clear to me that the UDA were involved and it made me very angry when my claims were rubbished.
“Now that the truth has emerged, it is important that the Secretary of State comes clean and tells us where these revelations leave the decommissioning process which could lead to the UDA getting millions of pounds to develop so-called ‘community projects'.”
The UDA started the process of decommissioning its weapons last month but was criticised for not completing the process.
Since then loyalists in the north Antrim and Londonderry areas have said they were withdrawing support for the police.
Mr Dallat said: “The UDA in Co Derry and north Antrim have given no indication that they are prepared to give up their wicked sectarian and barbaric ways and articles appearing in a recent edition of the so-called ‘Warrior' have let the cat out of the bag in a big way.”
He added: “If only to show respect for those they murdered, both Catholic and Protestant, they should not be allowed to raid the coffers of the public purse and the Secretary of State should speak out clearly on this issue.”
Meanwhile, a woman whose eight-year-old son was hit with a baseball bat by a gang who ransacked her home in Newtownabbey has blamed the UDA.
The gang of six masked men smashed windows and damaged the property of Lisa Moore at Carmeen Drive, Rathcoole, in the early hours of Saturday.
Her son Tyler was treated in hospital before being released and his mother has since blamed members of the loyalist group for ransacking her home.