The British government is to commit £3.3 million (€4.78 million) to projects aimed at removing paramilitary and sectarian murals.
The scheme was announced by in Belfast yesterday but was immediately criticised by the SDLP as "a sop" to paramilitaries and by Sinn Féin as biased in favour of loyalist areas.
However social development minister David Hanson said the Re-Imaging Communities Programme would help communities free themselves from paramilitary influence and association.
Culture minister Maria Eagle said the money would help local communities find ways to replace "divisive murals and emblems with more positive imagery".
They said the three-year scheme would not allow public money to be given to illegal organisations. Extra funds would be handled through the Arts Council of Northern Ireland, International Fund for Ireland and the Housing Executive to assist local artists to replace the old murals depicting violent imagery.
Some murals in loyalist areas of Belfast depicting paramilitary shootings have already been painted over. According to the Department of Culture, Arts and Leisure, the programme will support a range of community-led initiatives with grants of up to £5,000 for small projects and up to £50,000 for larger schemes.
Ms Eagle also announced an additional £100,000 "place, identity and arts" small grants programme aimed at fostering arts projects promoted by groups "which have difficulties on religious and moral grounds with accessing funding from the National Lottery".
Sinn Féin said the grant programme was "the latest in a long line of crude attempts by the British government to portray unionist areas as somehow more disadvantaged than nationalist ones".
Euro MP Bairbre de Brún said: "Only last week the British government announced £100,000 in funding for the Orange Order - an inherently sectarian and discriminatory organisation which seeks to parade through areas where they seek to cause gross offence to local residents." The SDLP's Alban Maginness said the scheme was outrageous.
"It is clear that any paramilitary murals designed to intimidate or mark out territory should be removed. Indeed their very existence is illegal. That is why today's announcement really beggars belief. People shouldn't have to be paid to take down paramilitary murals. They should be told to do it."