Johnny Adair was returned to prison under powers vested in the Northern Secretary under the Northern Ireland (Sentences) Bill 1999.
The Bill provides a legislative basis for the concept of prisoner releases as set out in the Belfast Agreement.
The agreement stated that "both governments will put in place mechanisms to provide for an accelerated programme for the release of prisoners . . . any such arrangements will protect the rights of individual prisoners under national and international law."
". . . Both governments will complete a review process within a fixed time frame and set prospective release dates for all qualifying prisoners.
"The review process would provide for the advance of the release dates of qualifying prisoners while allowing account to be taken of the seriousness of the offences for which the person was convicted and the need to protect the community.
"In addition, the intention would be that should the circumstances allow it, any qualifying prisoners who remained in custody two years after the commencement of the scheme would be released at that point."
Under the Northern Ireland (Sentences) Bill, prisoners apply to the Northern Ireland Sentence Review Commission, an independent body established by the Northern Secretary. The commission considers the case of each prisoner before judging when and if they should be given early release on licence. Before release each prisoner signed a licence agreement in which they undertook not to support named terrorist organisations and not to be concerned with the planning of terrorist acts.
If these conditions are breached, the Northern Secretary has the power to revoke the prisoner's licence and have him returned to prison.
It is not believed that the Northern Secretary has to be presented with evidence which meets the "beyond reasonable doubt" criminal standard of proof, but as an NIO spokesman said last night: "He can't just act on a whim, there must be some evidence that he is satisfied with."
Mr Mandelson later told the BBC why he had revoked Adair's licence.
"He [Johnny Adair] was clearly, based on the information given to me by the police, concerned in acts of terrorism, in the commission, preparation, instigation of acts of terrorism connected with the affairs of Northern Ireland. That's the basis on which I acted, and I believe it should be a lesson to everyone else."
Now he is back in prison, Adair has two options. He can wait for his sentence to run its course. Under normal circumstances he could be expected to serve around 2 1/2 years before being given remission.
He can also reapply to the Sentence Review Commission for re-release. Although independent, in considering Adair's case they would be expected to take note of the Northern Secretary's advice.
Last night, Mr Mandelson said that in his opinion Adair would remain in prison "indefinitely".
"It's open to him in due course to apply for early release again, but in view of what's happened, and the way in which he has had to be recalled, I think it will be some wait, and some time for him to go."