Northern Ireland Secretary Peter Hain expressed optimism today that loyalist paramilitaries could disarm and be brought into the mainstream in the New Year.
As Sinn Fein contemplated signing up to supporting the Police Service of Northern Ireland, Mr Hain said it was essential that loyalists followed suit.
As he looked forward to the New Year and the possibility of power sharing between unionists and nationalists returning, he said: "I am hopeful, more hopeful than ever that loyalist paramilitaries may decommission, may come into line and come into the mainstream which is where they need to be.
"We want to get them into a position where their own traditions can be respected with some dignity. That is where they need to be."
The Irish and British Governments have been involved in efforts to persuade Northern Ireland's largest loyalist paramilitary group, the Ulster Defence Association to abandon its weapons and engage in purely peaceful work to renew their communities.
The Ulster Volunteer Force has also carried out an internal debate throughout 2006 on its future direction in the wake of last year's ground-breaking moves by the provisional IRA to end its arms campaign and complete its disarmament programme.
So far, neither the UDA nor the UVF have decommissioned a single gun, explosive or bullet.
However, it is hoped that the return of power sharing and Sinn Fein's potential support for the Police Service of Northern Ireland will persuade loyalists to turn their back on para-militarism and criminality.
Mr Hain said following Sinn Fein's move to address demands for the party to sign up to policing, the people of Northern Ireland could go into 2007 with greater optimism.
"I think the New Year viewed from today is much brighter than it looked two days ago," the minister said.
"That is obviously tremendously encouraging.