Community development manager at Kilcooley Partnership Mark Gordon said: "We heard there were suggestions that there should be a fine placed on bonfire committees with too many Union Flags flying in their area.

"As a result of a breakdown of communication between the council and the community, it was decided to put up Union Flags – the flag of our country – around the town centre in a peaceful protest.

"We are having the Twelfth celebrations in Bangor this year and it will be the third largest demonstration in Ulster. The flags have been put up in the town centre along the parade route."

Mr Gordon said negotiations were under way between the council and the Intra Community Cohesion Project. He said the flags issue would be up for discussion again today.

"But I want to make clear the flags have not been erected in a sectarian stance, if they had they would have been erected in different parts of the town.

"Around 20 to 30 Union Flags and Ulster flags have been put up around the town in a peaceful protest.

"There is nothing illegal about the flags that have been erected or where they have been put."

A spokesman for North Down Borough Council said they are "very concerned by the proliferation of flags in the centre of Bangor and some other parts of the borough".

"We do not, however, have any authority to remove the flags, except where they are placed on council-owned property.

"Council members and officers are in discussions to address the matter, which we know is concerning many local residents."

Alliance MLA Stephen Farry said flags have now gone up in the town in areas which are a "shared space".

"These flags send out a strong message. If the authorities wish to challenge this marking out of territory then there is a perceived threat of more flags going up as a consequence. If this is a peaceful protest there is an implied threat of what the other could be.

"This is not a legitimate form of protest whatsoever."

Meanwhile, in Antrim, a number of Ulster and Union Flags erected in the vicinity of Saint Comgall's Roman Catholic chapel have been removed.

UUP councillor Drew Ritchie said: "Some of the flags erected around the roundabout at the chapel had been causing difficulty. A number of them were removed on Wednesday night after negotiations with the local clergy.

"The people who organised and helped get the flags down this week have to be applauded."

DUP councillor Brian Graham added that he believed it was useful to have the clergy in Antrim involved in the flags issue.

SDLP MLA John Dallat has called for a legal ban on the fundraising of money which is then used to buy loyalist flags that are put on lampposts.

The East Londonderry Assemblyman said he has received complaints from a wide spectrum of residents in the Greenmount area of Coleraine, "an estate in which people from both the nationalist and unionist community live".

"Above all, there must be zero tolerance for paramilitary flags which have been reported in the Ballysally area of Coleraine and there can be no room for negotiating when these appear. They must come down immediately," he said.