Democratic Unionist Jeffrey Donaldson said he is appalled by the revelation which he warned will have an impact on ongoing talks about dealing with the past.
It follows claims by a former minister that a de facto amnesty has operated south of the border for years.
"Frankly, I am not surprised by this revelation but I am appalled by it," said Mr Donaldson. "The innocent victims of terrorism in the Irish Republic are entitled to justice and it is a matter of concern that the Irish Government appears to have taken a unilateral decision not to pursue justice in such cases."
A British government-ordered inquiry into "comfort letters" issued to IRA fugitives found last week that they were lawful. The letters emerged after the collapse of the trial of John Downey, who had been charged with the 1982 IRA Hyde Park bombing.