The service of the UDR and Royal Irish Regiment during the Troubles may be marked with a medal, Armed Forces Minister Adam Ingram has said.
The three NI-based battalions of the RIR are being disbanded
Mr Ingram was speaking during a visit to Drumaad Barracks in Armagh to meet some of the soldiers affected by the disbandment of the home service units.
He said an honour could be similar to the George Cross awarded to the RUC.
Mr Ingram said it was not yet "fully defined" and the Army would decide "what's appropriate".
"We did it with the RUC in terms of the George Cross - again richly deserved - and, I think, much appreciated by those who served at the time and who had served previously," he said.
"Something similar will be done, of that nature, though we have not fully defined what and will announce that when we are ready to do so."
The NI-based battalions of the regiment are to be disbanded on 1 August 2007, the same day as the Army ends its support role to the police.
On Thursday, the minister announced redundancy packages costing up to £250m for 3,000 Northern Ireland Royal Irish Regiment soldiers affected by the disbandment.
Adam Ingram talks to RIR members in Armagh
Full-time soldiers will receive a special payment of £28,000, a redundancy payment and a pension.
Part-time soldiers will receive a special payment of about £14,000, but are not entitled to redundancy.
The three home service battalions are due to be disbanded by May next year. A senior officer with 22 years service could receive approximately £151,211.
As an alternative to the severance package, the MoD is offering a £10,000 taxable bounty to those who transfer into general service with the armed forces.
There will also be a welfare package to help full and part-time RIR members resettle, retrain and find work.
More than 3,000 soldiers serve in the three battalions, many part-time.
Troop levels in the province are to fall from 10,500 to 5,000 within two years.
The Royal Irish Regiment was formed in 1992, with the merger of the Royal Irish Rangers and the Ulster Defence Regiment.