DUBLIN (Reuters) - The Irish Republican Army announced an end to its armed campaign against British rule in Northern Ireland on Thursday, in a move Prime Minister Tony Blair said could mark the day "politics replaces terror" there.

But the province's main Protestant party poured cold water on the keenly awaited statement by the guerrilla group, saying it failed to forswear acts of crime or to inspire confidence that guns had been set aside for ever.

The IRA said in a statement it would cease all armed activity and pursue its aims through politics -- a crucial move to kick-start talks on a lasting political settlement in the violence-torn province. It said its units must "dump arms".

The IRA arsenal, used to fight for a united Ireland until a 1997 ceasefire, has long been the main obstacle to a political deal. Some 3,600 people died during Northern Ireland's 30 years of "Troubles", half of them killed by the IRA.

The group made no explicit reference to ending criminal activity -- also a major stumbling block to the peace process -- nor did it promise to disband, a move the group sees as akin to surrender.

The statement read in part:

"The leadership of Oglaigh na hEireann (IRA) has formally ordered an end to the armed campaign.

"This will take effect from 4 p.m. this afternoon. All IRA units have been ordered to dump arms. All volunteers have been instructed to assist the development of purely political and democratic programmes through exclusively peaceful means."

The IRA said it would engage with an independent arms decommissioning body to verify it had put its massive arsenal of guns and explosives beyond use, but gave no date for completion.

POLICING CRUCIAL

Northern Ireland Minister Peter Hain said the British and Irish governments had asked the province's ceasefire watchdog to produce a report in January so progress could be assessed.

And he said progress on the divisive issue of policing was now key. "I would be very clear that policing has got to be addressed," he told Reuters.

Mistrust of the largely Protestant police force in Catholic neighbourhoods was long cited as justification for the rough justice the IRA metes out in its working class heartlands.

Although the bombings and shootings that marked the "Troubles" have largely ended, violence continues to dog the province through beatings carried out by paramilitary groups seeking to control their communities.

But Blair said the IRA's call could spell the end to that.

"This may be the day which finally after all these false dawns and dashed hopes peace replaced war, politics replaces terror on the island of Ireland," he told reporters in London.

The United States, which brokered the 1998 Good Friday peace agreement, took a more cautious line.