Thirty years ago, two nervous Sunday Times reporters sat in a country inn outside Dublin waiting for an IRA contact to show up. Neither I nor my colleague David Blundy had ever met this shadowy figure before, and we knew nothing of his motives. But he had held out the promise of solving one of the darkest secrets of the Provisionals' terror campaign against the British - the truth about the murder of the undercover army intelligence officer, Captain Robert Nairac.

Even by IRA standards Captain Nairac's death was shocking. Taken from the Three Steps public house in South Armagh, where he had gone undercover to gather information about republican operations, he had been beaten, tortured and finally shot. His body has not, to this day, been found, though three men have been convicted for his murder, and three others sentenced for involvement in it. Inquiries remain open, and yesterday the Northern Irish police arrested another suspect.

That afternoon, David and I had nursed our beers for about two hours and were in an advanced state of jitters when our man suddenly appeared in the inn, looking every bit as terrified as we were. He gestured us outside, and we piled into a car, to be driven by a circuitous route that took us eventually halfway across the Republic. In the course of our journey he sought to establish his credentials by showing us an impressive-looking bullet hole in his shin, by telling us where various arms dumps could be found and by explaining exactly where Captain Nairac's body had been buried.

We had no means of judging whether the information was sound or not, but we managed to negotiate an interview with Garret Fitzgerald, then the Prime Minister, and his chief of police, to whom we told our story. The chief of police was less than impressed. “He's just after money,” he said. The farm outside Dundalk, which we had been told was Nairac's burial place, had already been searched, but he would check it out again. Our excitement evaporated. The policeman was probably right; soon afterwards we received a threatening call from our contact, demanding money, a passport and a new identity in the UK. We made our excuses and, rather hurriedly, left.

It was a sobering experience for us, but it only increased our respect for Nairac and his one-man intelligence gathering mission. He was a hero in the John Buchan mould, and I remember comparing him to Sandy Arbuthnot in Greenmantle - one of Buchan's “lean brown men from the ends of the Earth [who] may be seen on the London pavements now and then in creased clothes, walking with the light outland step, slinking into clubs as if they could not remember whether or not they belonged to them”.

Like Arbuthnot, Nairac believed in melding into the background in order to get closer to the enemy. He picked up a Belfast accent, dressed in an old cap, carried a stick, joined in the craic, knew every word of the IRA songs. The night he died, he was claiming to be Danny McAlevey from Belfast, and he sang the republican anthem, The Broad Black Brimmer. No one knows who tipped off the crowd that he was a Brit, but his end was as miserable as his exploits were daring. He was beaten horribly by his assailants, driven, half-dead, to a field by a river, tortured, and shot with a rusty pistol. A Catholic, he died with a prayer on his lips.

Ever since, rumours about the real nature of Nairac's undercover role have abounded. Like T.E.Lawrence, another maverick, he has attracted wild stories, of being involved in the murder of loyalists to protect his undercover identity, of passing information about UDR activities to the Provos, of conducting a freelance campaign that went far beyond his remit. We know nothing about all this, nor do we know how important the information he gathered was. Fellow officers have described it as priceless, and claim that it saved lives. Others say he put lives at risk. All we do know is that he was awarded the George Cross, Britain's highest peacetime decoration for bravery, and that he stands as a model of fearless individualism.

I would hazard that brave but shadowy figures like Nairac will always be more valuable to our national security than the blanket state surveillance foreshadowed in yesterday's Times, which revealed plans for a “Big Brother” database, on which details of every phone call, e-mail and internet connection made by every citizen in the land is recorded. The data will be held centrally, and will allow a vast bureaucratic army to monitor our every movement. Thus, it is hoped, will the suspicious movements of potential terrorists show up, rather as the particles in a CERN accelerator reveal, by minute deviation, the existence of something alien in their midst.

There is something chilling about this level of state intrusion, not just because of its connotations with the past, but because we have a shrewd idea that sooner or later it will go horribly wrong. Our track record of dealing with huge amounts of confidential information is lamentable.

I have no doubt that government monitoring stations, such as GCHQ at Cheltenham, have done valuable work. But I hope against hope that there are still brave agents out there, head swathed in a dirty turban, face burnt brown in the Afghan sun, talking to the Taleban in some remote bazaar, or sitting at a café in Basra with some renegade from Moqtada al-Sadr's army, or kneeling in prayer with hot-headed Muslim youths in the back streets of Bradford.

Nairac himself drew up a report on how best to conduct these negotiations. With those between 14 and 25, he said: “The best line of approach is to try to share their convictions. Some of them have a conscience and if so they will have some doubts. One good line from you could shake them out of their attitudes... Never use the words 'inform', 'information', 'witness' or 'intimidate'. Never write anything down; it smacks of police work. Never offer money for 'information'.”

And he ended with this optimistic view of the role of the go-between: “If approached the right way, the fence-sitter will come down on our side. When that happens, we have won.”

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