The NIO must "relinquish power" to a victims' commissioner if the post is to have "teeth", a victims' group has claimed.
Mark Thompson, director of Relatives for Justice (RFJ), criticised draft legislation covering the creation of a commissioner and a review of how victims are treated as "vague".
He also expressed concern that the proposed laws do not give the commissioner a "clear legislative remit" to tackle both the causes and results of the Troubles.
The Victims and Survivors (NI) Order 2006 is before parliament and could become law within weeks, with the appointment of a commissioner in early 2007 whose principal aim is "to promote the interests of victims and survivors".
This person will serve a four-year term and be held to account by the Office of the First Minister and Deputy First Minister (OFMDFM).
Written into Annex B of the St Andrews Agreement is also a promise by the government to "introduce legislation this autumn to establish a victims' commissioner for Northern Ireland".
However, Mr Thompson said he is concerned the commissioner's powers will be limited and tie him or her to dealing with "non-contentious" issues such as services for victims including counselling and therapies rather than tackling the legacy of conflict.
"These cannot be separated. There needs to be a holistic approach," he said.
Mr Thompson said he would like the commissioner entitled under law to have unqualified access to sensitive reports such as the Stevens' Inquiry.
"The NIO will retain power and won't relinquish this to a commissioner. They don't want people to look into controversial issues. Judge [Peter] Corry did and they changed the Inquiries Act," he claimed.
In his opinion the ideal candidate would come from an international background, have a clear understanding of conflict resolution and transformation issues and "come from a human rights background and have a legal understanding of international human rights standards".
A Victims' Liaison Unit was created under the terms of the Good Friday Agreement, with the NIO responsible for the management of funding to victims' groups.
Also contained in the agreement was the intention to create a victims' forum and, according to the government, its 'interim' commissioner is "carrying out essential preliminary work".
Mr Thompson said he favours a steering group, ideally consisting of 12 people who rotate the position of chairman, with the support of the entire community and those affected by conflict and work in conflict resolution.
Bertha McDougall was named as interim victims' commissioner in October 2005, although the appointment has been subject to a legal challenge by the widow of a man killed by a plastic bullet fired by an RUC reservist. A judgement could come within days.
Brenda Downes has argued the appointment by Secretary of State Peter Hain was a "sop" to the DUP and the candidate did not command cross-community support.
Mrs McDougall's policeman husband was murdered by the INLA in 1981.
Mr Thompson said the issue was not with Mrs McDougall but the government's actions.
The draft legislation's public consultation period ended in September and 24 responses were received.
According to the draft a new commissioner will be appointed by the first and deputy first ministers but there is a proviso that if devolution is not restored, the secretary of state will select a candidate.
One of the commissioner's principal tasks is to agree an annual programme of work with OFMDFM which is expected to include setting up the forum.
However, the idea of a 12-month scheme of work does not appeal to RFJ, which believes a long-term approach would produce more results and even then should be reviewed on an annual basis.
Mr Thompson also takes issue with what he sees as the government having already set out the areas which the commissioner will look at, believing "the commissioner in cooperation with the steering group should outline these areas".
Although organisations such as RFJ can treat the symptoms of people affected by the Troubles, Mr Thompson wants the government to address the causes of trauma.
Victims want their pain acknowledged and part of the healing process involves those responsible admitting their wrongdoing, he said.
Wave is another group helping those bereaved during the Troubles and has 600 new referrals every year.
It is concerned that the legislation makes no reference to an NIO victims' minister and said this portfolio must be retained "until the new appointee has provided their first review of the progress they have made".
Criticising the "premature and ad hoc closure of the NIO's Victims' Liaison Unit, chief executive Sandra Peake said it had been Wave's experience that devolved ministers were "reluctant to engage in issues because of their respective political party line".
Wave also takes issue with the government's use of 1968 as a reference point for the beginning of the Troubles given that "the first death is recorded as 1966" and Ms Peake said "in the interest of equity and fairness" the victims' commissioner should also represent those who left the north as a result of the Troubles, not only those who still live in Northern Ireland.
While the Human Rights Commission can conduct investigations and help individuals, there is no such role envisaged for a victims' commissioner, according to Ms Peake.
"It would be useful if the victims' commissioner had similar powers in which they could assist individuals with particular issues and could follow through at a legal level if required."
Wave wants an assurance that the commissioner will consult trauma advisory panels and other grassroots organisations because "in the absence of an effective victim/survivor forum the trauma advisory panels are the closest body representing a wide range of agencies and organisations including individual representation".
The issue of funding is one which Ms Peake would like to be placed in the hands of OFMDFM.
"If the commissioner's office had a funding remit it would put them in an untenable position on the first occasion they had to turn down funding from one group or another. This would undermine other work being undertaken through the commissioner's office," she said.