IRA members are demanding a major internal investigation following the disclosure that their head of internal security was a highly-paid British army agent.
The spy, named in some newspapers yesterday, reported to his British handlers under the codename "Stakeknife" and supplied high-level intelligence for more than 20 years.
He is thought to have been "run" by the army's intelligence body, the Force Research Unit (FRU). It is further understood that his handlers removed him at the weekend when it became clear he was to be named in weekend papers.
He is thought to be in hiding at a safe location outside Northern Ireland, but despite this there were reports of sightings of him in Belfast yesterday.
A senior member of the IRA's so-called "Nutting Squad", he was responsible for identifying and dealing with informers. He is being linked with dozens of murders and with the interrogation, torture and killing of IRA members thought to have leaked information. Reports also link him with the SAS killings of three IRA members in Gibraltar and with the arrest of Mr Danny Morrison, who was later jailed.
"This has sent shockwaves through the entire army (IRA)," said a senior west Belfast source. "People are asking if they ended up in jail, or their comrades ended up dead, because of this man.
"They also want to know why there was no safety mechanism to ensure this didn't happen. Why was there no individual or group monitoring the activities of internal security? Reflecting the gravity of the revelation for the IRA, the source continued: "The system meant that if internal security was corrupt, then the entire organisation was compromised."
Another source said IRA members were worried there could be other high-ranking informers still within the organisation. "Questions have to be asked as to how this man progressed to such a senior rank, who promoted him, and who ensured he stayed in position without any doubts being raised over the years."
An IRA member in north Belfast said: "It now seems that no matter what precautions a volunteer took to protect their personal security, it was pointless. This man could have instant access to your personal details. Once you joined the IRA, you were compromised."
The families of IRA members who were shot dead as informers, and who have always insisted on their relatives' innocence, are also demanding an explanation from the IRA leadership.
The sister of one IRA member tortured and killed said: "For years, I've had to live with the shame of my brother being wrongly labelled an informer. The real agent was at the top of the IRA."
Mr Gerry Kelly of Sinn Féin said: "The claims being made in weekend media surrounding the alleged activities of a British agent working for FRU are extremely serious."
The Northern Ireland Office said the matter was one for the British army, although it is understood the claims are being taken as valid.
The naming of Stakeknife is also seen as a blow for the British army, already reeling from the findings of the latest Stevens inquiry into collusion between the security forces and loyalist killers. Perhaps as many as 20 officers and former officers face prosecution following the Stevens findings.
Sir John Stevens has confirmed he wants to interview Stakeknife urgently about allegations that many paramilitary operations and murders were "allowed" to proceed to protect his identity and the information he provided.
Sir John said: "We fear other informants have been sacrificed to save him and we will be asking him about that."
If accurate, the revelations indicate the British army's inability to protect its undercover agents, which could have serious effects throughout its intelligence network.