An Taoiseach Enda Kenny is risking consequences worse than already feared unless he makes more of an effort to resolve a crisis, warned Mr Martin.
Speaking at his party's annual Wolfe Tone commemoration in Bodenstown, Co Kildare, Mr Martin said Dublin has failed to respond to a rise in sectarian rows, escalating tensions and a collapse of faith in institutions set up by the Good Friday Agreement.
"What has been missing is any serious engagement by either the Dublin or London government," he said.
"They have been complacent and disinterested.
"Particularly damaging is how the entire issue of development through North/South cooperation has been ignored."
Mr Martin criticised a recent development plan for British Occupied Ireland which "makes no mention of the Republic" and hit out at the Taoiseach for not attending a major investment conference in Belfast.
"Worst of all it is how vital North/South infrastructure projects such as the Narrow-Water Bridge are being abandoned because of a lack of commitment from the governments," he said.
"The economic and social development of this island, and of the border region in particular, demands strong North/South cooperation. "
The Fianna Fail leader said historic progress for peace and reconciliation on the island could not have been possible without the priority which different Irish leaders gave to it.
"Formal meetings and dinners aren't enough, you have to spend the time developing links and building trust," he said.
"The current Taoiseach needs to start giving it his attention or the consequences may be much greater than we already fear."
Meanwhile relatives of British IRA victims faced off in London over their view of the Peace Process outside an event addressed by Sinn Fein leader Gerry Adams.
Police intervened to stop a verbal exchange between Colin Parry, whose 12-year-old son Tim was killed by an IRA bomb in Warrington 15 years ago, and campaigners for the 21 victims of the Birmingham pub bombings.
Brian Hambleton, whose 18-year-old sister Maxine was killed in the 1974 Birmingham attacks, accused Mr Parry of "rubbing shoulders" with the men who had killed his son.
The confrontation came after Mr Parry delivered a speech at the conference organised by Sinn Fein about the work he does with a peace foundation he created to honour his son and a three-year-old who was killed by the same blast.
After moving on at the police's request, he said: "They don't understand that we don't just yell about victims - we work with victims of terrorism, we actually help them.
"The idea that I am some kind of IRA apologist is disgraceful.We can all yell and scream at each other over barricades, but that won't get us anywhere.It hurts that somebody would be so unaware of what we do that they could accuse me of kowtowing to terrorists.I don't do that and I never will, but I recognise that the armed struggle is over and we have to build new ways. That's my simple position."
About 30 protesters picketed the conference, held in the London Irish Centre in Camden, north London.
They carried banners which read Justice For The 21 and Gerry and The Peacemakers Will Always Walk Alone While IRA Victims Are Ignored.
A group of far right-wingers carrying a loyalist flag confronted Sinn Fein members and sympathisers leaving the Irish centre and accused them of attending a "murderers' covenant".
After talking to Mr Parry, Mr Hambleton said: "He wants us all to jump on the Jolly Roger with him and Gerry Adams.
"I told him that I am fighting for his son as well as my sister.How he can have a drink and a sandwich with that man is beyond all human recognition."
Mr Hambleton said he wanted Mr Adams to speak to him and other relatives of the Birmingham victims, but claimed: "They will only talk to people that tell them what they want to hear.They are talking about a new phase of the peace process but are not willing to face up to what they did and address the suffering of the members of our community."
During a speech delivered earlier in the day, Mr Adams said he "understood" the grief of relatives of the Birmingham and Warrington killings.
"As a Republican leader I have never and I will never distance myself from the actions of Republicans," he said.I've shouldered too many problems, been to too many gravesites.
"I understand the scale of the loss and the grief that exists in our communities - families in Birmingham, Guildford and Warrington."
He hailed Mr Parry, who last month invited former IRA commander Martin McGuinness to speak at the commemoration of the 15th anniversary of the Warrington bombings, as an "inspiration".
Tim Parry and three-year-old Johnathan Ball were killed when bombs planted in litter bins in Warrington's main shopping area were detonated shortly after midday on a sunny Saturday afternoon.
No warning was given and no one has been prosecuted for the outrage on March 20 1993, that left 56 people injured.
Six men were convicted and served 16 years in prison over the bombings in Birmingham's Tavern in the Town and Mulberry Bush pubs on November 21, 1974.
Their convictions were quashed by the Court of Appeal in 1991 and no one has been brought to justice since.
The British Government have re-introduced political internment without trial, which originally started the latest phase of the conflict over 40 years ago. Irish people regard political internment without trial, as a provocative act of war by the British Government on the Irish people and an excuse to expand the financially lucrative British industrial war complex in Ireland. It is also an excuse to use ordinary British taxpayers monies in bloated MI5 secret service budgets running death squads like the Shankill butchers.