It was probably under cover of darkness that the killers’ car approached the remote cottage where Denis Donaldson was holed up on Monday night. Did he hear the low purr of the engine as the car crawled up the lightless country road? Or was the first sound that wakened him the brittle crash of glass as a brick smashed through the window? Either way, as he rushed to bolt the front door, above which was nailed a lucky horseshoe, it was kicked open and shotgun blasts sent him staggering back into the room.

There was no back door and nowhere to run as the gunman reloaded his weapon, dropping the two spent cartridges in his haste. Two more blasts almost severed Donaldson’s right hand and hit him in the chest and face. The killers ran, leaving the two cartridge cases behind them. Donaldson’s body, dressed in pyjamas, was found the next afternoon by a neighbour who tooted her horn as she drove by and was alarmed when he did not come out to wave.

She, like everyone else living around Glenties, in wild, rocky Donegal, near the west coast of Ireland, must have suspected that Donaldson was living on borrowed time. Last December the once-senior IRA man — most familiarly seen in a photograph with his arm around Bobby Sands, the iconic republican hunger striker — revealed that he had worked for British intelligence and the police Special Branch for 20 years.

It was a stunning confession which threw the republican world into confusion. There is traditionally only one punishment for “touts” — death. But Donaldson might have believed that as the IRA had officially declared an end to its “armed struggle” by the time he confessed, he would be spared. The IRA denies killing Donaldson but, even if the murder was not sanctioned by its leadership, the finger of suspicion points firmly at republicans furious at what they see as his betrayal of their cause.

Since January Donaldson had lived quietly in self-imposed exile at a holiday cottage that his family had owned for many years, drawing water from a well and curling up by a wood-burning stove at night as the freezing Atlantic winds raged across the hills. He was apparently calm but Raymond Gilmour, a supergrass and police agent who was resettled in England under a false name provided by MI5, knows the terrible haunting fear that he must have felt.

“I am lucky if I get two hours’ sleep a night. I am just waiting for someone to creep up the stairs, always aware of my surroundings,” he says. “I have nightmares constantly. I dreamt of Martin McGuinness (the Sinn Fein leader) a couple of weeks ago. He was with a group of guys putting the hoods on just ready to come and get me like someone got Donaldson. Poor guy.” Gilmour suffers post-traumatic stress disorder and has a psychiatrist paid for by MI5.

Did Donaldson think he could get away with it? His whereabouts were widely known in republican circles and he shopped in the nearby village. Two weeks before he died, a reporter visited him. Donaldson told him: “I am not in hiding, I just want to be left alone . . .”

Donaldson had a long and, until last December, illustrious history with the IRA. Born in 1950 in Short Strand, a beleaguered nationalist estate in loyalist east Belfast, he was one of the Provisional IRA’s first recruits in 1969. He had become a local hero after he took part in a gun battle with marauding loyalist gangs outside St Matthew’s chapel.

An active participant in the IRA bombing campaign that paralysed the commercial heart of Belfast in the early 1970s, he served four years in prison alongside Sands. His friendship with Sands, a republican martyr, made his eventual betrayal all the more bitter.

After he was released from jail, Donaldson became an IRA intelligence officer and was entrusted with the delicate task of contacting foreign revolutionary groups including Eta, the PLO and Hamas. In August 1981, three months after Sands’s death, Donaldson and William “Blue” Kelly, a leading IRA gunrunner, were arrested by French police at Orly airport in Paris. Some suspect that this might have been the moment when he was turned by intelligence agents, but in a press conference he stated that he had become a British agent after “compromising myself” in the mid-1980s.

Theories abound as to how this happened. A charming, witty and popular man, he was a notorious “chaser”, Belfast slang for a philanderer. On one occasion the police caught him in bed with another woman and told his wife. Could they have used this weakness to blackmail him? Former IRA comrades dismiss the possibility. “If you chase like Denis chased then you don’t need the police to tell your wife, someone else will,” one said. Others say that he was caught in a fraud involving a city centre store and feared being sent back to jail.

Security sources say that he was a “walk in”, that is, he volunteered to work for them and the most likely explanation is that he did so to get charges dropped against a relative. He was potentially a good recruit: he had extensive knowledge of the IRA’s foreign networks and while he was an agent he was sent to Lebanon by Sinn Fein to try to negotiate the release of Brian Keenan, the Beirut hostage.

One officer who had knowledge of his intelligence output since the mid-1990s said: “It was always political information. He was very much into giving you the way the Provos were thinking, the way they were going forward and changing and the way he believed they were moving away from violence. You don’t get big money for that.”