In a written statement to MPs on Wednesday, the Home Secretary said: "Today the Security Service reduced the threat level to Great Britain from Northern Ireland-related terrorism from substantial to moderate.
"This means that a terrorist attack is possible, but not likely."
Theresa May said threat levels are being kept under constant review and the risk posed by international terrorism remains substantial.
"Despite the change which has been made today, there remains a real and serious threat against the United Kingdom from terrorism and I would ask the public to remain vigilant and to report any suspicious activity to the police," she said.
"The decision to change this threat level is taken by the Security Service independently of ministers and is based on the very latest intelligence, considering factors such as capability, intent and timescale."
The threat assessment was increased in September 2010 after Jonathan Evans, the director-general of MI5, warned that dissident Irish republicans could attempt a new wave of terrorist attacks on the British mainland.
It's encouraging to see that the view is being taken that there is a reduced threat, but I think we put out a very clear warning to everybody that we need to remain vigilant.
Security journalist Brian Rowan said there has recently been one telephone bomb warning in Great Britain "that turned out to be nothing" although the threat in Northern Ireland remains severe.
"That's because there's an ability to kill. We've seen that, but that's the exception rather than the rule," he explained.
"I think the big concern and fear in all of this is that these intelligence and security ratings in many senses exaggerate the threat and present it on a bigger stage than it should be on, which allows these organisations to puff their chests out and present themselves to be something they're not."
First Minister Robinson described the downgrading as "good news", but asked people in the region to remain vigilant.
"We still have a terrorist organisation intent on killing and doing damage in Northern Ireland. That requires people to be alert, it requires us to give full support to our security services and while things are going in the right direction, let's not be complacent," he commented.
Deputy First Minister Martin McGuinness said he wants to see the local threat "totally non-existent".
"I hope those people associated with armed groups will recognise that the best approach and strategy for them is to be part of the good news that's clearly developing here, as we move forward to build a better future for all the people that we represent."
I hope that those people who are associated with armed groups will recognise that they're being left behind.
Vernon Coaker, Shadow Secretary of State for Northern Ireland, said: "We must continue to support the police, army technical officers and security services in combating those who want to destroy the peace.
"In Great Britain, while the threat itself has been lowered, I know that there will be no downgrading of the commitment of the security services to combat terrorism and protect the public. There should be no reduction in the resources they are given to do that," he added.
Meanwhile, DUP MP Nigel Dodds has urged the Secretary of State Theresa Villiers to look positively on any request from the PSNI Chief Constable for additional access to the Treasury Reserve.
He raised the issue during Northern Ireland Questions in the House of Commons.
"It is encouraging news that Home Office intelligence is detecting a lower level threat from dissident republicans in Great Britain however there should be no lowering of our guard and no reduction in security.
"I am concerned that announcements about lowering the threat level from dissidents may actually be counterproductive," he added.
"It is essential that her Cabinet colleagues look favourably on any request for additional funding from the Treasury Reserve to combat the terrorist threat."
Ms Villiers replied: "In both Great Britain and Northern Ireland the Government is focused on defeating terrorism and we will use all means at our disposal to do that."