The IRA has issued a statement tonight saying all its proposals in the peace process, including those on putting arms beyond use, are "off the table".
In a new blow to the process the Provisionals said they would not succumb to "ultimatums, false and malicious accusations or bad faith".
Both the Irish and British governments have blamed the IRA for the £26.5 million Belfast bank heist, an allegation the organisation has denied. Yesterday the Taoiseach and the British Prime Minister said IRA criminality was the sole obstacle in the peace process.
IRA statement
In an 800-word statement, the group said its initiatives had been "attacked, devalued and dismissed by pro-unionist and anti-republican elements, including the British Government. The Irish Government have lent themselves to this."
It said the IRA leadership had been prepared to "resolve the issue of arms" by Christmas and was prepared to instruct its members not to engage in activities that could endanger the process.
"Others, however, did not share that agenda. Instead, they demanded the humiliation of the IRA," the statement said.
"At this time it appears that the two governments are intent on changing the basis of the peace process. They claim that 'the obstacle now to a lasting and durable settlement... is the continuing paramilitary and criminal activity of the IRA'. We reject this.
"It also belies the fact that a possible agreement last December was squandered by both governments pandering to rejectionist unionism instead of upholding their own commitments and honouring their own obligations.
"We do not intend to remain quiescent within this unacceptable and unstable situation. It has tried our patience to the limit.
"Consequently, on reassessment of our position and in response to the governments and others withdrawing their commitments; We are taking all our proposals off the table. It is our intention to closely monitor ongoing developments and to protect to the best of our ability the rights of republicans and our support base."
The statement went on to say that the IRA wanted the peace process to succeed.
"We have played a key role in achieving the progress achieved so far. We are prepared, as part of a genuine and collective effort, to do so again, if and when the conditions are created for this."
A Government spokesman said this evening the Taoiseach would not be responding to the IRA statement. "The Taoiseach has made the Government's position clear," he said.
The Taoiseach's continuing criticism of Sinn Féin and the IRA continued in the Dáil earlier today when Mr Ahern said he believes the Sinn Féin leadership was aware of a number of operations carried out by the IRA last year, including the Belfast bank robbery, while in negotiations with the Government.
Mr Ahern made the claim based on briefings he received in London yesterday from PSNI Chief Constable Hugh Orde and Garda Commissioner Noel Conroy.
"They believed that a number of operations that took place during 2004 - not just the Northern Bank robbery - were the work of the IRA, had sanction from the Army Council and would have been known to the political leadership of the IRA," Mr Ahern said.
He went on to say there could be "no possibility" of building trust and confidence in the peace process in the coming months unless the two governments are given "clear positions" on the issues of criminality and paramilitarism.
Sinn Féin's chief negotiator, Mr Martin McGuinness, earlier accused the British Prime Minister, Mr Tony Blair, of "talking nonsense" when he said yesterday IRA activity was the only obstacle to political progress.
Speaking after a Sinn Féin delegation met Northern Secretary, Mr Paul Murphy, in Hillsborough Castle, Co Down, Mr McGuinness said: "Paul Murphy was left with no illusions about the huge anger within the nationalist and republican community at the current mishandling of the situation by the two governments."
