Mr John Hume, who jointly won the Nobel Peace Prize with David Trimble for helping to broker the Good Friday Agreement, described the claim that he passed on information about arms dumps as "absolute nonsense".
Mr Hume, who is in the US on a lecture tour, said: "The allegation that I gave information to the British Army about the location of weapons in Derry in 1971 is absolute nonsense. It is completely untrue.
"I wouldn't even have had a clue where arms dumps were. This is a cynical attempt to divert attention away from those guilty of the slaughter of innocent people in Derry on Bloody Sunday."
Mr Martin McGuinness, the Sinn Féin MP for Mid Ulster, said later he did not wish to dwell on the allegations made against Mr Hume.
He said outside the hearing: "I note that John Hume has refuted the allegations, therefore I have no intention of dwelling on this issue.
"I do, however, find it strange and inconsistent that Lord Saville should find it appropriate to intervene and stop this train of evidence since he has no such problem hearing evidence of allegations against me from an anonymous source that refuses to appear for cross examination before the inquiry."
Mr McGuinness was referring to the inquiry's ruling not to call to the stand the MI5 agent, codenamed Infliction, who claims that he fired the first shot on Bloody Sunday.