British intelligence services were operating all over Ireland and were receiving information from politicians, as well as members of the gardaí, the army and customs service, the Smithwick Tribunal has been told.
The claims were made by former British Army intelligence officer Ian Hurst during interviews with senior gardaí and in his own direct evidence.
The tribunal, which is investigating claims of collusion in the killing of two RUC officers in March 1989, heard today from retired Chief Supt Basil Walsh.
He said he met Mr Hurst twice in 2000 at his home in Carrick-on-Suir and in Waterford Garda Station.
During those meetings, Mr Hurst mentioned that a number of gardaí were passing information to the British intelligence services.
Mr Hurst said he had recruited a member of a garda task force in Donegal, who would come to Ballymena to pass on information, for which he would be paid £50 or £60.
He also said he was aware of a garda and a Senator talking to MI5.
However, the witness said Mr Hurst refused to name any of the individuals involved.
When the reading of Mr Hurst's direct evidence to the tribunal resumed, it emerged that he said British military intelligence services had members of the Irish Army, as well as many gardaí and members of the customs service, passing information to them.
They also had sources in the RUC and customs service in Northern Ireland.
The witness served in the secretive Force Research Unit, the intelligence wing of the British Army in the North.
He said they worked on an all-Ireland basis and had bases in Sligo and Donegal.
Mr Hurst is subject to British Ministry of Defence restrictions as a result of which his evidence was heard behind closed doors last week and is now being read into the record following the removal of parts of his evidence.
Mr Hurst also reiterated his allegations against Northern Ireland's Deputy First Minister Martin McGuinness.
He said that Mr McGuinness did not leave the IRA in the early 1970s as he claimed.
Mr McGuinness controlled Northern Command for most of the time and was also on the IRA Army Council and had responsibility for controlling people such as Freddie Scappaticci.
Northern Command would have had to sanction operations such as the use of human bombs and the ambush in which Chief Supt Harry Breen and Supt Bob Buchanan died and which is being investigated by the tribunal.
It has been alleged that Mr Scappaticci was the deputy head of the IRA's internal security unit and the most important British Army agent in the organisation.
Mr Scappaticci and Mr McGuinness both deny the allegations.
Earlier, retired Chief Supt Walsh said he was aware of Mr Scappaticci and of his involvement in the IRA.
However, he disputed several claims made by Mr Hurst in his evidence.
He said there was no mention of Owen Corrigan during their meetings. Mr Corrigan is one of three gardaí being investigated by the tribunal and he denies the claims that he passed information to the IRA.
The witness also denied saying that gardaí had tried to remove Mr Corrigan but could not because of political pressure.
Former Chief Supt Walsh also said he could not have been present at a third meeting that Mr Hurst said he was because he had retired from the gardaí at that time.