David Shayler: politicians were bugged

"Operatives grappling with bureaucracy are not catching terrorists" Dur: 6'39"

Security Service 'Could Have Finished the IRA'

David Shayler said inefficiency and bureaucracy were to blame.

Mr Shayler also said he had been employed specifically to check up on senior Labour politicians who might get into government, prior to the party losing the 1992 general election under the then leader, Neil Kinnock.

He told BBC Television's Newsnight programme: "I think there was a real chance in '93 after MI5 took over primacy for Irish investigations on the mainland that they really could have finished off that campaign if they'd taken the advantage when they had it.

"There were a lot of arrests in sequence in early-mid '93 and the IRA really were on the ropes on the mainland. Everything they seemed to do seemed to end in disaster.

"If they'd really gone for it then and really had themselves clued up to really go for it, they [MI5] could have finished them off," Mr Shayler said.

Peter Mandelson: target

The Home Secretary, Jack Straw, is being sent an urgent report by the Security Service following earlier allegations by Mr Shayler that the organisation bugged young politicians, a journalist and celebrities.

He claimed in the Mail on Sunday  newspaper that his former employers tapped the telephone of Peter Mandelson, now Minister without Portfolio, for up to three years in the late 1970s.

Mr Shayler said that as well as Mr Mandelson, the Security Service had in the past kept files on a journalist, celebrities, Harriet Harman - who is now Social Security Secretary, in charge of government welfare benefits - and a youthful Mr Straw himself.

The report was volunteered by the Security Service's director general, Stephen Lander.

A Home Office spokeswoman said: "Consideration is being given to what if any action should be taken."

She declined to go into details about the issues which would be covered in Mr Lander's report, or spell out what action it might be considering.

Action may include considering a prosecution of Mr Shayler for what appears to be a breach of the Official Secrets Act.

The Liberal Democrats' Home Affairs Spokesman, Alan Beith, said MI5 could not ignore what Mr Shayler had done.

Mr Mandelson dismissed as "a pure smear" suggestions that MI5 took an interest in him because he had been a member of the Communist Party in the 1970s.

He said in an interview with The Guardian that he had briefly attended meetings of the Young Communist League when he was an 18-year-old sixth form pupil in 1971/2.

But the Minister without Portfolio said: "I was never a member of the Communist Party. That is a pure smear."

The Guardian itself is asking Mr Lander for an explanation of Mr Shayler's allegation that MI5 tapped the home telephone of Victoria Brittain, the paper's deputy foreign editor, after large sums of money were deposited in her bank account. The transactions were innocent, the paper said.

Mr Shayler also recounted that MI5 kept files on John Lennon and "subversive" bands such as the Sex Pistols and UB40.