SECRETARY of State Julian Smith has condemned as "utterly offensive" a series of loyalist banners targeting Sinn Féin's John Finucane and the SDLP's Claire Hanna.
He said the controversial banners have been "rightly condemned" and that "publication of offensive material ... is a matter for the police".
The banners row has dominated the Westminister election campaign in Northern Ireland in recent days amid fears of an increasingly "toxic" tone to the political debate.
Read More: Jamie Bryson denies involvement in banners targeting Sinn Féin's John Finucane
Police are examining whether the banners could constitute a criminal offence such as a "hate incident or hate crime".
One banner targeting Mr Finucane was removed by Belfast council under police guard on Monday from a council playpark in the loyalist Tigers Bay area.
The DUP came under pressure to "clearly condemn" the displays.
DUP deputy leader Nigel Dodds later insisted his party would have nothing to do with anything that demonised or smeared rival candidates.
But he and party leader Arlene Foster challenged Sinn Féin to condemn IRA violence during the Troubles and "not be selective about it".
Prominent loyalist Jamie Bryson has denied being behind the contentious banner campaign.
He said the allegation was "absolute nonsense" and an "effort to create one particular bogeyman".
In an unusual intervention, Mr Smith gave his reaction to the banners after being asked whether electoral rules in Britain which could help regulate such displays would be extended in future to Northern Ireland.
In a statement to The Irish News he said: "These posters were utterly offensive and have been rightly condemned.
"However, publication of offensive material, whether or not related to an election, is a matter for the police."
Several loyalist banners have been erected against Mr Finucane, while another banner targets Ms Hanna, amid tensions over tight election races in two Belfast constituencies.
Mr Finucane is hoping to take the North Belfast seat from Mr Dodds, while Ms Hanna is vying to unseat the DUP's Emma Little-Pengelly in South Belfast.