Sir Reg Empey told his party conference that Ulster Unionists should be included in negotiations if they are to support the devolution of policing and justice powers.
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Sir Reg said the DUP and Sinn Fein had sidelined the Ulster Unionists, as well as the nationalist SDLP.
He demanded round-party talks to secure any creation of a new Ministry of Justice for Northern Ireland.
In recent months, the DUP and Sinn Fein have been involved in lengthy talks with Prime Minister Gordon Brown on the transfer of policing and justice authority from Westminster to Stormont.
'Puppet'
But Sir Reg said on Saturday: "We have no objection to these powers coming back to Stormont if the terms are right.
"But I do not believe, and the UUP does not believe, that a deal concocted privately between the DUP and Sinn Fein, a deal dependent on the appointment of a puppet minister and subject to a 'sunset clause', is the right way to transfer policing and justice powers. There is a better way to do this."
He warned DUP leader and First Minister Peter Robinson that all the parties must be brought into talks on the issue.
"The Executive must sit down to discuss what we might do with policing and justice powers to meet the inevitable challenge we will face if there is no agreed vision," he added.
"While Peter Robinson said this week that he will not do this policing deal without this party, I must tell him that there will be no support from us for any backroom deal.
"We have set out our terms for this devolution, so, Peter, there will be a price."
He said the drop in support for the DUP in the European elections earlier this year showed the party no longer dominated unionism.
Sir Reg added: "Change is coming, Peter, whether you like it or not."
New Force
Shadow foreign secretary William Hague also addressed the party conference on Saturday.
He said a future Conservative government will refuse to fund further costly inquiries into the Troubles.
Earlier this year, a government-sponsored report proposed a special commission to deal with the needs of victims and examine unsolved murders.
One of the authors of the document, former deputy chair of the Northern Ireland Policing Board Denis Bradley, has warned the Conservatives against binning the plan.
"Under a Conservative government there will be no more costly and open-ended inquiries into the past," Mr Hague said on Saturday.
"It's time for Northern Ireland to move forward."
The Ulster Unionists and the Conservatives are currently selecting joint candidates ahead of the next election.
"Our aim is clear. We want to end the semi-detached political status of Northern Ireland and bring you back into the mainstream of United Kingdom politics," Mr Hague said.
"It's time to put Northern Ireland at the heart of the union."
He added: "Any Conservative and Unionist MP elected here will take the Conservative whip and have the same rights and responsibilities as every other Conservative MP from England, Scotland and Wales.
"And that means being eligible to serve as ministers in a Conservative and Unionist government for the whole of the United Kingdom."
Critics inside the UUP have claimed the Tory pact risked isolating traditional supporters with left-wing views, but Mr Hague said the promise of a role in a future Cabinet was something no other Northern Ireland party could offer.
© Press Association