Here is the report from todays Daily Telegraph:

THE IRA yesterday broke off contacts with Gen John de Chastelain, the decommissioning chief, and said that it was withdrawing "all propositions" on disarmament in protest at the suspension of power-sharing institutions in Northern Ireland last Friday. The statement - issued shortly after Gerry Adams, Sinn Fein's president, held what he described as a "bad meeting" with Peter Mandelson, the Northern Ireland Secretary - deepens the Ulster crisis and will exacerbate a serious rift between London and Dublin.

The timing of the announcement appeared designed to increase pressure on Tony Blair to restore the power-sharing executive on the eve of his meeting with the Irish prime minister, Bertie Ahern. Dublin wants the Ulster institutions restored immediately on the basis of a second, more positive report by Gen de Chastelain issued a few hours after they were suspended last Friday.

But the Government remains unconvinced that the general's second report represents the "major breakthrough" which Irish nationalists and republicans claim. The IRA announcement is a public relations victory since it restores the terrorist movement to centre stage. Until 5pm yesterday the joint objective of the two governments was to find a way to satisfy Unionist demands for decommissioning. Now they will focus on how to bring the IRA back into the process.

Sir Ronnie Flanagan, Chief Constable of the RUC, said the IRA statement had no immediate security implications but was "not good news". The Irish Fine Gael opposition leader John Bruton said the timing of the statement was "the height of impertinence" and that the IRA had treated Mr Ahern "appallingly".

The IRA statement said it had agreed to appoint a representative to meet Gen de Chastelain last November "on the basis that it would be part of a series of events including and in particular the establishment of the political institutions set out in the Good Friday Agreement". The gesture was intended to remove the impasse "created and maintained by Unionist intransigence" and the Government.

The statement said: "The British Secretary of State has reintroduced the Unionist veto by suspending the political institutions. This has changed the context in which we appointed a representative to meet with the IICD [the decommissioning body] and has created a deeper crisis." Mirroring claims by Mr Adams, it accused the Government and the Ulster Unionists of rejecting Gen de Chastelain's second report.

The statement said: "They obviously have no desire to deal with the issue of arms except on their own terms. Those who seek a military victory in this way need to understand that this cannot and will not happen. Those who have made the political process conditional on the decommissioning of silenced IRA guns are responsible for the current crisis. In light of these changed circumstances, the leadership of the IRA have decided to end our engagement with the IICD. We are also withdrawing all propositions put to the IICD by our representative since November."

Mr Mandelson said the IRA statement was disappointing. "I believe this is a time when all channels need to be kept open. What was on the table had real potential and people will be sad that it could not be worked on and developed in the way that is needed."

But Mr Adams, speaking before the IRA statement was issued, claimed Mr Mandelson was not prepared to take a decision that did not have the approval of Unionism. "As far as we are concerned, we have moved beyond our obligations," he said. The Sinn Fein leadership had "no further room to move".

Mr Blair was warned by Gen de Chastelain at the weekend that the IRA was preparing to pull out of the disarmament talks. Government officials last night said the IRA statement had not come as a "great surprise". The Prime Minister was said to "regret" the decision. But Downing Street officials made clear Mr Blair was determined to press for answers from the IRA over whether they would disarm.

"We need clarity. We need certainty over the decommissioning of weapons," a senior Government source said last night. The advance warning that the IRA was pulling out of the disarmament talks was one of the reasons for the hectic round of negotiations in London, Dublin and Belfast since Friday's suspension of the power-sharing executive at Stormont.