The PSNI and government agencies have been accused of a 'dereliction of duty' after more flags, including a 'Parachute Regiment' flag, were erected close to a Sinn Féin office.
The flags were put up in Lurgan town centre last night by men in high-viz vests using a cherry picker.
A confrontation ensued with local residents who called on the men to stop putting up what were described as 'divisive' emblems.
It is understood the PSNI arrived at the scene but no flags were removed.
Sinn Féin MLA John O’Dowd has said the annual abandonment of town centres to flags and bunting is 'a dereliction of duty by statutory agencies including the PSNI and Department for Infrastructure (DfI)'.
Mr O’ Dowd said: “The failure of any agency to enforce the law in our town centres is now an annual event.
“The inclusion of Parachute Regiment Flags and another Solider F Banner in the display this year lays bare the lies that this is a cultural celebration.
“The inclusion of Parachute Regiment Flags and a solider F banner is seen by many as a celebration of the murder of 14 catholic civilians on the streets of Derry.
“The bunting and flags are about marking out territory and intimidation. Those responsible get away with it year after year.
"This year they have upped the anti with Parachute Regiment flags and a Solider F Banner mocking victims of the conflict.
Mr O’Dowd said: “The PSNI and DfI have serious questions to answer as they continue to turn a blind eye and deaf ear to cross community concerns."
Community worker Paddy McMenamin was very upset at the erection of the flags. He said he had been prevented from taking photos by 'a number of loyalists who stood in front of me.'
He said the PSNI arrived and he was told he could be accused of causing a breach of the peace.
"I ask him was putting up para flags not a breach of the peace," he said, adding that a community police officer had assured him they would get the matter sorted and they were doing their best to have the flag removed.
"I told him the flag is provocative and will lead to trouble if it's not removed," said Mr McMenamin.
This morning no flag is flying directly outside the Sinn Fein office, however a Parachute Regiment flag is flying a short distance away in the centre of town.
ACC Mark Hamilton said; "Across the year and across many communities in Northern Ireland local people erect flags, banners and other symbols relating to cultural identity, political issues and support for particular views which may be contested by others in the community.
"In many cases these symbols will cause offence to one community but may not be in themselves illegal. The flying of any flag or banner should be carried out with the consent of the person or organisation who owns the street furniture or property on which the item is flown or displayed.
"While the removal of such items is not the responsibility of the Police Service of Northern Ireland we are committed to working with communities and partners to build a safe and inclusive society.
"Where we receive reports of banners or flags being erected, we will attend to ascertain proof of permission for erecting a banner or flag and gather evidence in the event that any offence is committed. We will then pass details to the relevant land or property owner who will decide on the appropriate course of action which may include the matter being reported for prosecution.
"Specifically in the case of flags and banners in support of the Parachute Regiment it is the understanding of the PSNI, in consultation with the prosecution agencies, that these banners and flags of themselves do not constitute a criminal offence, however the erection of these banners or flags without permission may constitute an offence if the owners wish to pursue a prosecution.
"Police will act to support the removal of banners by those who have responsibility for a structure on which the item is displayed but we will only consider removing such items ourselves where there is an imminent and immediate likelihood of a breach of the peace.
"The most effective solution to this issues is community resolution with engagement between local communities working with local agencies and resulting in local decision-making.”
"We will continue to work with communities and partners to find lasting solutions however police action on its own is not sufficient."