As the British government's most powerful weapon in its 30-year 'dirty war' against the IRA and Sinn Fein, Scappaticci is suspected of being allowed by the army's Force Research Unit (FRU) to take part in up to 40 murders. He is said to have been involved in the killings of loyalists, policemen, soldiers, and civilians to protect his cover so he could keep passing top-grade intelligence to the British. He also kidnapped, interrogated, tortured and killed other IRA men suspected of being British informers.

He is also said to have provided his military handlers with the information which led to the 'Death on the Rock' killings of three IRA volunteers in Gibraltar in 1988 by the SAS. At the time, the IRA were convinced that their active-service unit had been betrayed by an informer. However, their mole-hunt drew a blank.

Files based on intelligence from Scappaticci were forwarded to prime ministers Thatcher, Major and Blair. During a 25-year career infiltrating the IRA, Scappaticci rose to become head of their Internal Security Unit (the so-called Nutting Squad) and a member of the IRA's General Headquarters Staff. He also became close to some of the most powerful members of the republican movement, including Sinn Fein President Gerry Adams and former IRA chief-of-staff Brian Keenan.

The IRA fear the outing of Stakeknife could deal an almost-fatal blow to the organisation. A senior Republican source said last night: 'This is the most dreadful news I've ever heard. I don't know how we can recover from this. How can we have any confidence left in ourselves when a man like Scappaticci turned out to be Stakeknife?'

Scappaticci was paid an estimated £80,000 a year by British intelligence. The British army knew his cover would be blown this weekend following a story the Sunday Herald carried last week revealing that rogue British agents planned to expose his identity.

MI5 spirited Scappaticci out of Ulster, moving him to a safehouse in the Irish Republic. He is now believed to be at a military establishment in southern England.

The events follow a week of turmoil and chaos within British military intelligence, the UK government and the ranks of the IRA.

The exposure of Scappaticci as Stakeknife comes just weeks after Scotland Yard Commissioner, Sir John Stevens, released his report on alleged collusion between British security forces and terrorists in Northern Ireland.

As a result of Stevens's work nine members of the FRU, including Brigadier Gordon Kerr, the Aberdonian army officer who led the unit, could now face prosecution. An unquantifiable number of civilians may have been killed because of state collusion with para militaries, including Belfast solicitor Pat Finucane.

The dramatic events have now led to the British government taking tentative steps toward setting up a South African-style Truth and Reconciliation Commission -- an idea backed by many families of the Troubles, but opposed by many unionists.

Last night, the Northern Ireland Office told the Sunday Herald that the government now wanted to 'address the suffering of victims of violence as a necessary element of reconciliation. The [British and Irish] governments will seek to establish what practical steps can be taken to recognise and address the suffering of all victims. We expect this initiative to include discussions of issues like truth and reconciliation.'

A senior British intelligence officer said Scappaticci's exposure meant 'the dirty war in Ulster is over. With Stakeknife gone, there are no more nasty secrets to come out.'

The Republican movement is devastated by the revelations that Scappaticci, one of the IRA's most feared and admired operators, was the biggest and most damaging double agent ever to work within the Provos.