A prominent republican and trusted lieutenant of Gerry Adams was expelled from Sinn Fein tonight after he was accused of being a British security services agent for 20 years.

Denis Donaldson, a 55-year-old former head of administration at Stormont was ousted from the party in a new twist to a spying scandal which triggered the collapse of the Northern Ireland Assembly.

Mr Donaldson's arrest in October 2002, along with that of his son-in-law Ciaran Kearney and William Mackessy, a civil servant, became known as Stormontgate - a republican spy ring at the centre of government.

Eight days ago, the Public Prosecution Service announced it was no longer pursuing a case against the three men because it was not in the public interest.

Today's turn of events indicates that far from being a republican spying on the Government, Mr Donaldson was a British double agent working at the heart of Sinn Fein.

Tony Blair, the Attorney General Lord Goldsmith and the Northern Ireland Secretary, Peter Hain, now face demands from unionists and moderate nationalists for a parliamentary statement explaining why the case was withdrawn.

Mr Adams said that Mr Donaldson had approached Sinn Fein’s chairman Declan Kearney yesterday after being warned by the Police Service of Northern Ireland he was going to be exposed publicly as an agent and his life was in danger.

Asked if he had ever suspected that there had been an informer within Sinn Fein’s ranks, Mr Adams said: "I was very, very suspicious and some of us were very suspicious when the events of 2002 unfolded, when we saw this hugely-orchestrated operation at Stormont because we knew there was no Sinn Fein spy ring at Stormont.

"More recently when this case collapsed, when the British did not prosecute, that suspicion was deepened. I had suspicions that there was somebody wrong within this - I had no specific suspicions about Dennis Donaldson."

A Police Service of Northern Ireland spokesman said: "Police do not confirm or deny whether an individual is or was an informant."

Unionists have demanded, with no success, that the "public interest" in dropping the charges be explained. It is likely that today's developments may go some way to explaining what seemed, even by Ulster’s standards, a murky decision.

DUP MP Jeffrey Donaldson said: "This has certainly given an added twist to the entire Stormontgate scandal, and confirms our view that the reasons the court decided not to prosecute was because to do so would have compromised an agent of the state and sensitive security documents. It also raises the question that the decision not to proceed was politically motivated."

The Northern Ireland office strongly rejected Mr Adams’s claims.

In a statement, it said: "We completely reject any allegation that the police operation in October 2002 was for any reason other than to prevent paramilitary intelligence gathering.

"The fact remains that a huge number of stolen documents were recovered by the police. In terms of the dropping of the prosecution, that was a matter for the independent prosecuting authorities and there was no political interference whatsoever in that decision."

Mr Donaldson is fortunate in at least one respect. The traditional fate of a republican charged by his or her own comrades of working for the British was to be condemned to death. The bodies of scores of earlier "volunteers" have been found, shot through the back of head on a lonely roadside.

Mr Donaldson could not be contacted last night.

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