Denis Donaldson's killers were most likely republicans who carefully planned their operation and more than one person was involved, according to Garda sources in Donegal.
However, as Taoiseach Bertie Ahern and British prime minister Tony Blair travel to Armagh city today to unveil proposals to fully restore devolution by November senior British and Irish government sources said there is no evidence that the murder was "authorised" by the IRA leadership.
But if such evidence should ever emerge then that would spell the end of the political process in Northern Ireland, they warned.
Garda Chief Supt Terry McGinn, who is heading the investigation, was asked yesterday did she believe republicans killed the British agent. "At this stage I am keeping an open mind on the inquiry and following all avenues," she said.
Garda sources in Donegal however said the main line of inquiry was that republicans were responsible although the possibility that some of Donaldson's former British intelligence handlers were involved was also not ruled out.
They said that "republicans" could mean Provisional IRA members acting officially; Provisionals operating individually to kill Donaldson in revenge for his acting as a British agent; or dissident republicans. The IRA denied involvement.
The Garda sources said the murder was carefully planned. "All the signs are that his cottage was carefully cased before the killing and that an organised unit rather than an individual was involved in what amounted to an execution," The Irish Times was told.
Garda sources added that it was significant that Donaldson was murdered with shotgun blasts rather than shot by an army or paramilitary-style weapon. They believed a shotgun was intentionally used to make it difficult to forensically trace from where it originated.
Postmortem results issued last night by the gardaí reported that death was due to a shotgun wound to the chest. Results also indicate that other injuries to the body were consistent with shotgun blasts, including a severe injury to his right hand.
Mr Ahern and Mr Blair both acknowledged that the killing has made today's latest attempt to effect political progress more difficult. They nonetheless decided that they must press ahead with their plan to reveal their proposals in Armagh this morning.
Mr Ahern and Mr Blair indicated yesterday that they do not believe Donaldson's killing was an officially sanctioned IRA murder.
Mr Blair appeared to believe dissident or maverick IRA members were involved. "It is important that we don't allow any act of violence, no matter by whom it is perpetrated - and sometimes these things can be perpetrated by people in disagreement with their own leadership - to derail the process," he said.
Mr Ahern said he had "no idea" who killed Donaldson but whoever was responsible "was no friend of the peace process" - a point also made by Sinn Féin's Martin McGuinness.
Both Mr Ahern and Mr Blair seemed to believe the Sinn Féin argument as enunciated by Mr McGuinness that the IRA would not be so "stupid" as to wreck the political opportunity to restore devolution that they had helped create by decommissioning and ending their armed campaign.
A senior London source said there was no evidence that the killing was "authorised" by the IRA leadership. "If it was authorised by the IRA then this is bigger than the Northern Bank robbery. The important thing is that we are not going to duck this issue. If there is evidence that it was the IRA then we will face up to that, and if there is evidence then, that's it as far as the process is concerned," he said.