The Stormont power-sharing Executive was tonight given a 48-hour ultimatum to reinstate a funding programme for loyalist communities or face legal action.
Social development minister, Margaret Ritchie, and the Office of First Minister and Deputy First Minister received a letter today from an employee at Farset Youth and Community Development warning of legal action if the controversial Conflict Transformation Initiative, is not restored.
The intiaitive, worth stg£1.2 million, over three years, funds community projects in loaylist communities.
Last month, a row erupted within the Stormont Executive when Ms Ritchie axed the funding because the Ulster Defence Association had not disarmed or begun to wind down its paramilitary activity.
The fund was originally devised by former Northern Ireland Secretary Peter Hain in a bid to encourage the UDA to turn its back on criminality.
However, the UDA insisted it was not directly involved in the administration of the scheme, which was instead being carried out by Farset.
A Department for Social Development spokesperson confirmed they had received the letter from legal representatives of the Farset employee.