The Real IRA is on the verge of disbanding, according to reports.

Real IRA terrorists being held in an Irish jail have claimed that the group's leadership has "forfeited all moral authority" and should now disband.

They accuse the leadership outside the jail of "fraternising with criminals" and being driven by financial motives.

They have also admitted carrying out the Omagh bombing, in which 29 people died, with the help of another organisation - not named but understood to be the Continuity IRA.

The claims come after the provisional IRA rejected Tony Blair's call for disbandment.

An IRA source told the Press Association that the group will reject Blair's ultimatum.

"There is considerable concern within the IRA at recent developments. There is also real anger at the attempt to present the IRA as a threat to the peace process," said the source.

"The IRA is not a threat to the process and will not accept the imposition of unrealistic demands."

David Trimble, however, has warned the prime minister that he should not resurrect devolved government in Northern Ireland until the IRA honours its commitment to peace.

"This time he must insist on completed acts," he said. "It is time for conclusions, time for the transition that republicans say they are making, to be completed."

And Sinn Fein's leader has claimed Tony Blair does not have a plan to implement the Belfast agreement.

Responding to the prime minister's ultimatum, Gerry Adams told journalists on Friday that republicans wanted to see an end to the tolerance by the British government of both unionist paramilitaries and "its own army".

"Let's be clear about this. We know there's a tolerance of unionist violence. You have David Trimble going into talks flanked by the UDF and UDA," he said.

"There's a faultline and we have to face it."

Adams remained optimistic that the current crisis would be resolved.

"Let's keep working round or within the template that has been agreed. These issues can be resolved. I wouldn't be standing here if I didn't believe they could be sorted out," he said.