Mediators are negotiating with the IRA and a gang responsible for last week's murder of 24-year-old Keith Rogers at the weekend in a bid to end the bloody dispute without further killings.
Republicans have accepted the mediator despite demands for revenge against the IRA member's killers.
Yesterday PSNI Chief Constable Hugh Orde said the killing was the result of a split in the IRA along the Border. However, at the funeral for Keith Rogers on Friday last, senior republican Brian Keenan branded his murderers as "criminals".
Keith Rogers from County Louth was shot dead last Wednesday after a row broke out at Cullaville, in South Armagh.
"It clearly was a fall-out between two factions of the Provisional IRA. That sends a very worrying message to us," said Mr Orde.
In a statement claiming Mr Rogers as one of its members, the IRA said he was unarmed and not on active service.
The veteran Belfast republican Brian Keenan told mourners that now was not the time for revenge. However, republican sources have told irelandclick.com that there is "deep anger" among republicans. "People want to hit back but they're being told this is not the time," said the source.
One man who was arrested in connection with the incident has been released on police bail.