Devolved powers for social welfare could be handed back to Westminster, Peter Robinson has suggested.
The first minister warned on Tuesday of potential "nuclear options" if the Stormont parties could not reach agreement on welfare reform.
One of these, he said, might be to return those powers.
The welfare reform bill, if implemented, would largely introduce measures already introduced elsewhere in the UK.
Sinn Féin and the SDLP are currently refusing to support it.
In an interview for BBC Northern Ireland's The View, to be screened on Thursday evening, the first minister said what he called "nuclear options" did not, at this moment, include pulling the DUP out of the Executive.
But he said the facts were, if the bill was not implemented, that the budget would be cut.
He said if Stormont overspent, it could lead to massive financial penalties.
"If people are not capable of governing and taking those difficult decisions, then that power should not be devolved," he said.
"It can be as simple as saying to the government: 'This government is not competent to take difficult decisions because two of the parties in the five-party coalition are not prepared to take difficult decisions.
"Therefore, you have to take this off us. We no longer want to have devolved to us, these issues."
Sinn Féin's Alex Maskey said that Mr Robinson had chosen to provide "backing vocals to the scaremongers in his party rather than providing real leadership" on the issue of welfare reform.
"The energy of the first minister and the DUP should be concentrated on standing up to Tory cutbacks," he said.
"Instead, they are trying to explain away what is an unjustifiable assault on the working poor, the disabled and the unemployed."
He said the DUP had "decided to fight the European and local council elections on an anti-welfare state manifesto" adding that they "appear determined to replace the UUP as the Tory party's new partner in the north".
Peter Robinson's interview can be seen on The View, BBC One Northern Ireland at 22:35 BST.