The Prime Minister, who described the loyalists' announcement as 'unalloyed good news', is expected to underline the importance of the ceasefire in his keynote speech to the Tory party conference today in Bournemouth.
He said the Government would assess whether there was a 'working assumption' that the ceasefires would be permanent - the coded language it will use to accept that Sinn Fein and the loyalists have met the terms of the Downing Street Declaration for entering talks on Ulster's future.
One of the difficulties to be resolved will be whether officials should talk directly to the loyalist paramilitaries, who have no direct democratic party representatives.
Mr Major spoke to Rod Lyne, his Downing Street adviser on Northern Ireland, about the ceasefire before holding a press conference on the steps of his hotel.
The Prime Minister emphasised the need for a cautious response by the Government. 'We must consider it and carefully decide with clear realism what is the best way forward. That is what we propose to do,' he said.
The caution adopted by the British government was one of the reasons there had been progress, he added. 'If we snatch at these things, it is going to slip away. We will need to retain the confidence and trust of the people in Northern Ireland. They expect us to be cautious.'
Peter Temple-Morris, a senior Tory member of the Anglo-Irish Parliamentary group, urged the Government to move quickly to draw Sinn Fein into the talks process. Ian Paisley, the Democratic Unionist Party leader, raised suspicions that a deal had been reached after the loyalists were given 'assurances'.
But Sir Patrick Mayhew, Secretary of State for Northern Ireland, told the Tory conference that no deals had been done. He added: 'We will want to be clear that the intention of permanence is genuine. We will test it as we have the sincerity of the IRA. And if we can confirm to our satisfaction that the intention is permanent then we will explore with them the ways that the peace process can be strengthened and their views taken into account.'
The loyalists' ceasefire took the heat out of protests by Tory unionists at the party conference, who had been planning to stage a protest during a debate on Northern Ireland to press the Government to be a 'persuader' for the Union.
In a clear signal to unionist critics of the Downing Street Declaration, Sir Patrick said it was a time to build bridges, not 'ramparts, however satisfying that may superficially be made to seem'.
He said the wish of the Northern Ireland people to remain in the Union was all the more convincing because it was manifest absolutely freely, and 'not following persuasion from London'.
However, opening the debate, Mel Shepherd, from Gedling, emphasised that it was the Conservative and Unionist Party which had a declared aim of maintaining the union.
Leonard Fee, from the Northern Ireland area council, said that devolution for Northern Ireland would be the 'slippery slope' to the disintegration of the United Kingdom. If Northern Ireland had a referendum, Scotland would want one too.
Underlining the point, Dorothy Dunlop, a former Belfast city councillor, added: 'If the union is valued for its own sake then it follows that every part of the union is of equal value, whether the Government has a selfish strategic or economic interest in it or not.'
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