The Ulster Unionist leader, Mr David Trimble, has said the North risks descending further into "a society marked by gangsterism" unless paramilitary control of certain areas is tackled.
He supported the setting-up of an anti-intimidation unit to give victims a public voice and to co-ordinate services to combat the problem.
Mr Trimble was speaking following the publication of a House of Commons Northern Ireland Affairs Select Committee report calling for the practice of paramilitary expulsions to be stopped.
Welcoming the report, he said it exposed the "barbaric practice" of expelling people from their homes and from Northern Ireland.
"At least 1,600 people have been forcibly relocated since the ceasefires," he said. "Unless the illegitimate writ of the paramilitary groups is undermined, we face a very real danger of further descending into a society that is marked by gangsterism.
"Turning a Nelsonian blind eye to the problem of paramilitary domination of certain areas, including the practice of exiling, is a gross betrayal of some of the most vulnerable, powerless and disadvantaged members of our society."
The Northern Ireland Affairs Select Committee inquiry urged the British government to show more support for victims. Last summer hundreds of families were intimidated from their homes during the loyalist feud.
"Housing homogeneity appears to be a particular aim of the loyalist paramilitaries, as in the case of the loyalist feud in parts of Belfast last year," the report stated.
The single greatest contribution to combating paramilitary exclusions would be greater public confidence in the rule of law, the committee said.
It referred to the recent RUC report showing most criminal gangs in the North had links to republican or loyalist paramilitaries and said their grip would have to be weakened.
Meanwhile, another report by the select committee appealed to the Orange Order to try to sort out its difficulties with the North's Parades Commission. The committee said the order should set down ways it believed would open up direct engagement with the commission, which has been adjudicating on parades since 1998.
Mr Willie Thompson, a UUP MP and committee member, said loyalists needed indications that the commission was not biased against them and would not give in to threats of disorder from nationalist residents.
The Orange Order recently signalled it may be prepared to lift its ban on talking to the commission. The committee report also recommended that the commission should appoint more women and members of the loyalist and nationalist communities.
The first controversial march of the season is due to take place on Easter Monday, when the Apprentice Boys parade down the lower Ormeau Road. Nationalist residents are today mounting a legal challenge to the Parade Commission's ruling and are threatening to block the road.
The Progressive Unionist Party, the UVF's political wing, yesterday claimed that Protestant homes near the route of the parade had been attacked by nationalists.