The Rev Roy Magee, who helped broker the 1994 loyalist ceasefire, said the murder of Shankill Butcher, Bobby "Basher" Bates, put a new strain on the loyalist ceasefire.
Mr Magee, who said he had been in touch yesterday by telephone with loyalist paramilitaries, described the situation as "very difficult".
He added: "There is great strain on the ceasefire once again and what is left of the peace process is going into tatters".
However, he said of the killing: "This looks like the settling of old scores and that brings another dimension."
Mr Magee said he was "shattered" when he heard of Mr Bates's murder.
The last time he spoke to Mr, Bates he had "unburdened himself", Mr Magee added. "He said, and I quote him, `If they were to lock the door and throw away the key that's what I deserve. He said `I have caused so much hurt to so many people. I have ruined families. I have wrecked lives'." Mr Magee said the killing "has put a tremendous pressure on the loyalist ceasefire but I sincerely hope that sanity will prevail. One thing I will say is Bobby Bates would not want any retaliation. He had come to a very firm faith in Christ and he was ordering his life from that standpoint."