DENIS Donaldson may have been murdered to avenge the death of an IRA assassin killed by the British army almost 20 years ago.
Jim Lynagh, 32, was among eight Provisionals ambushed as they tried to blow up a police station at Loughgall, Co Armagh, in May 1987.
This is the main line of inquiry being pursued by Gardai in Ireland, security services confirmed yesterday.
After it was revealed that Mr Donaldson, 56, one of Sinn Fein's top officials, turned informer more than 20 years ago, the republican movement knew his betrayal had inflicted serious damage, and that may have included briefing his handlers on the IRA's Loughgall plot.
The SAS were lying in wait for the heavily armed Provo unit when they arrived at the station with a 200lb bomb. All the terrorists died instantly, including Lynagh, who had been wanted by police for six years.
He had been involved in IRA operations across Tyrone during the 1980s. Lynagh was also suspected of involvement in the murder of a former unionist MP and speaker at the old Stormont parliament, Sir Norman Stronge, and his son, James, in 1981.
"We are 80 per cent certain that his murder was planned and carried out by those who were close to Lynagh," a security source said.
"There's a 10 per cent chance it was individual disgruntled Provisionals; and a 10 per cent chance that dissident republicans carried it out."
Mr Donaldson was buried on Saturday after a funeral in Belfast attended by less than a hundred people.