An additional £10 million will be spent on policing in the North.
The Northern Secretary said the extra money would take effect immediately, bringing the total budget to £645 million for the current financial year.
Dr Reid's announcement came after a British government report warned that a large resource gap could hit the Police Service of Northern Ireland when it began operating. "I am determined that the police should have the resources they need to do the job," he said.
Dr Reid has held talks with the RUC Chief Constable, Sir Ronnie Flanagan, and the Police Authority to identify what additional funds are needed but he said: "I have decided immediately to provide an additional £10 million for policing this year, to cope with the short-term pressure."
The Northern Ireland Police Authority welcomed the extra money, but its chief executive, Mr Joe Stewart, said: "Much more will need to be done if we are to ensure that the police service is resourced more appropriately in future years."
The DUP insisted the extra funding was inadequate for the massive changes policing was set to undergo. Mr Ian Paisley jnr, the party's justice spokesperson, said: "The sop to the RUC today still leaves it with a deficit for the incoming year of £10 million."
Criticising Sir Ronnie for welcoming the cash boost, given the current budgeting problems, Mr Paisley added: "If the government can find millions of pounds for the various inquiries into various cases in Northern Ireland then they will have to find the necessary resources to finance the police."
Meanwhile an Ulster Unionist MP has said new recruits for the police service are not of good enough quality to allow for vacancies to be filled on a 50-50 basis.
The Rev Martin Smyth said he had been told that highly qualified candidates were being turned away with "the implication being that there were too many suitable Protestant applicants".