PRESIDENT Clinton stepped into the fragile peace process in Northern Ireland again last night with a stark warning to paramilitaries that any return to violence could end the friendly relationship between Ireland and the United States.

At the same time, the breakaway Loyalist Volunteer Force, the most ruthless of all the Protestant paramilitary organisations, announced a ceasefire in a bid to boost the No vote in next week's referendum on the peace deal.

As Mr Tony Blair drew the Northern Ireland peace settlement into the very heart of the G8 summit in Birmingham, the US president sent his message to perpetrators of violence on both sides of the sectarian divide. But it was a clear signal to the wavering Unionist camp that if Sinn Fein did not stand by all the terms of the peace settlement, American support would be withdrawn.

President Clinton, reinforcing the Government's commitment to the entire peace settlement, warned the paramilitaries that anyone who returned to violence ''will have no friends in the United States''. His intervention highlighted the increasing concern at the flakiness of Unionist support. Earlier in the day, the signals from Downing Street were to expect a joint statement from President Clinton and Mr Blair on Sunday.

The Government played down the declaration of a ceasefire from the LVF who all along have tried to undermine the peace settlement. The decision to link an LVF ceasefire to a No vote is a move widely interpreted as an attempt to muddy the waters by appealing to the extremists' hostility to the Government's plans. Certainly there is unlikely to be any serious attempt to negotiate with the LVF, who are considered to have a more erratic and irrational leadership.

Of much greater concern was the continued opposition from Ulster Unionist Jeffrey Donaldson, who last night was still not persuaded to change his mind. Downing Street officials were in touch with Mr Donaldson in a series of phone calls throughout yesterday afternoon but failed to persuade him they had met his main concern - that IRA prisoners be denied the envisaged amnesty if the terror group held on to its weapons.

Tomorrow President Clinton is widely expected to address the plight of victims in Northern Ireland and last night there was speculation of a US commitment to a generous economic package for Northern Ireland.

The LVF made its ceasefire announcement when a group of armed men appeared in front of a television camera in Mid Ulster. It said the truce would be unequivocal to create a proper climate for a No vote in next week's referendum vote.

Mr Gary McMichael, leader of the Ulster Democratic Party, the political wing of the UDA which declared a ceasefire in October l994, said that he welcomed the announcement and called on the republican INLA and Continuity IRA to do the same.

However, he was concerned the LVF decision was a ''tactical device which will be revised'' if the peace agreement was endorsed.

Meanwhile, at a special one-day meeting at Dublin Castle yesterday, all but one of the 50-strong representative body of British and Irish parliamentarians urged acceptance of the Northern Ireland agreement in the referendum on both sides of the Irish border.

The one exception, Mr David Wilshire, was disowned by the former Conservative Northern Ireland Security Minister, Mr Michael Mates, as representing no-one.