Hopes that the IRA was about to disband have been dashed with the announcement that it has cut off contact with the international decommissioning body.

The IRA issued a statement late on Wednesday saying it had broken off contact with the group led by Canada's General John de Chastelain.

In its statement, the IRA said its ceasefire was still intact despite the move.

In a clear response to Tony Blair's speech in Ulster earlier this month, the group said it would not give in to "deadlines and unreasonable demands" by the British government.

Westminster watchers said the announcement amounted to a bargaining attempt.

But hard-line Ulster Unionist David Burnside called on ministers to exclude Sinn Fein from the peace process following the move.

The commission had led the IRA to undertake two historic acts of decommissioning in October 2001 and April this year.

The announcement came on a day that had begun on a hopeful note after Sinn Fein's chief negotiator Martin McGuinness had said his war "is over".

Formerly a senior IRA member, the man who led the republican negotiating team throughout Good Friday Agreement talks said he now saw his role as a peacemaker.

With devolution in Ulster currently suspended and the peace process facing its greatest challenge yet, McGuinness's comments will be regarded by many nationalists as a significant step towards a republican commitment to peace.

"My war is over. My job as a political leader is to prevent war," he says in a programme for BBC Northern Ireland.

"My job is to continue to ensure a political set of circumstances which will never again see British soldiers or members of the IRA lose their lives as a result of political conflict. I feel very passionate about that."

Prior to the suspension of devolved government, McGuinness had been education minister in Belfast's power sharing executive and had been working on controversial plans to scrap the 11-plus exam in Ulster.

The documentary indicates McGuinness now sees himself committed to his political work, putting his past membership of the IRA behind him.

"My political project until the day I retire from politics or die is to build a better future for all of our people.

"That is my project. It is a political project - not a military one," he says.

Following Tony Blair's call for the IRA to finally decide whether it is in or out of the peace process, the comments from a leading republican will raise hopes that a deal can yet be done to restore devolution to Stormont.

The comments come days after Sinn Fein president Gerry Adams said he could see a day when the IRA would cease to exist.

Downing Street welcomed the recent announcements but stressed that it was time that the IRA's journey to peace came to "a conclusion".

The Conservatives had recently ended the cross-party coalition but the party's shadow Northern Ireland secretary Quentin Davies described the announcement as "significant" and urged the government to "strike while the iron is hot".

He argued that any agreement with the IRA had to come with agreed timetables and sanctions if they were not met.

"My own recent conversations with Martin McGuinness himself lead me to feel quite convinced that we should take this opportunity seriously," he said.

"The government should now attempt to negotiate a comprehensive agreement with all parties for the implementation of the Belfast agreement, and covering all outstanding issues."