The British government has extended financial sanctions on Sinn Féin in response to the Independent Monitoring Commission's (IMC) report that blamed the IRA for the Northern Bank robbery.
Northern Secretary Paul Murphy also told the House of Commons there will be a motion proposing the removal of allowances for the party's MPs.
Northern Secretary Mr Paul Murphy in his address to the house of Commons
The British response was prompted by the IMC report, published on February 10th, which said some Sinn Féin leaders were involved in authorising the £26.5 million sterling robbery in Belfast on December 20th last.
Sinn Féin president Gerry Adams had described the report as "rubbish" and challenged the Taoiseach, Mr Ahern, to arrest him.
The report stated that Sinn Féin members allegedly in the IRA leadership sanctioned the Northern Bank raid and three other major robberies last year in Belfast and Strabane.
In his Commons statement today, Mr Murphy proposed the renewed withholding of Sinn Féin's "Assembly Party Allowance" - worth £120,000 - when that existing penalty expires in April. A new 12-month period of sanction will be begin on April 29th next, Mr Murphy said.
In addition, he signalled the British government's willingness to bring forward a motion calling for the withdrawal of Sinn Féin MPs' Westminster allowances, worth close to £500,000 a year.
"The debate on that motion is for another day," he added, "but I should emphasise to the House, lest anyone accuse us of denying the extent of Sinn Féin's electoral support, that the measures we are proposing are designed to express the disapproval of all those who are committed to purely democratic politics at the actions of the Provisional IRA."
"All in this House recognise the degree of support for Sinn Féin, but we also believe that the actions of the republican movement are letting down everyone in Northern Ireland, including Sinn Féin voters."
Mr Murphy said he was not going to exclude Sinn Féin from the political process because the "reality remains that long-term stability in Northern Ireland will not come about if we focus on exclusion".
He added: "That objective requires inclusion: dialogue with Sinn Féin must continue in order to see how that long-term goal can be achieved. But I am clear that this must be inclusion on the basis of a complete and demonstrable commitment to non-violence and exclusively peaceful and democratic means."
Mr Murphy decided against withdrawing the salaries and expense allowances of Sinn Féin's Assembly members, worth an estimated £1.5 million a year.
Sinn Féin held rallies across the North last night, and Mr Martin McGuinness told a rally in Belfast the republican movement faced a huge challenge to withstand the "avalanche of propaganda" against them.
Yesterday, the Minister for Justice, Mr McDowell, repeated his allegations that Mr Gerry Adams, Mr Martin McGuinness and Mr Martin Ferris are members of the IRA army council, despite their "categorical" denials of these claims.
Mr McDowell has also reiterated there was no difference of opinion between him and the Taoiseach in relation to his making these allegations. Mr Ahern said he had "no hard evidence" of who was on the IRA's army council.
