The Taoiseach, Bertie Ahern, is understood to have underlined to the Prime Minister in a telephone conversation his view that nothing less than an independent public inquiry would be acceptable to Dublin. Fourteen civilians were killed in the incident in Londonderry in 1972.
The Irish authorities are determined any new investigation should be fully independent and headed by a figure of prestige acceptable to all sides. Mr Ahern made clear again his view that an apology would not suffice.
On Wednesday Mr Blair is due to answer a parliamentary question from Norman Godman, chairman of the Labour party's back-bench committee on Northern Ireland, who yesterday travelled to Londonderry to view the scene of the killings. He said he believed Tony Blair and the Northern Ireland Secretary, Mo Mowlam, were sympathetic to calls for a fresh inquiry. The 26th anniversary of the deaths falls on 30 January. A campaign to have the incident reopened has gained momentum in recent years, winning the support of Dublin and other important elements. The past year in particular has seen the emergence of new evidence shedding fresh light on the incident.
Dublin has compiled its own report, said to provide detailed analysis of the latest evidence and to draw "very strong conclusions."
While the Government has come under pressure to act, it represents a political and legal minefield for the authorities.
Almost any move, whether in the form of a new inquiry or an official apology, raises the question of possible prosecution of the paratroopers who fired the shots or, conceivably, their superior officers.
It is presumed the authorities would wish at all costs to avoid charges and trials.
There is no clear optimism in Irish government circles that the inquiry will be conceded, given Ministry of Defence reservations about the damage that might result for the Army's reputation and the civil service if a cover-up were exposed.
Campaigner Tony Doherty, whose father Paddy was among those killed, said: "It appears from all accounts that the British Cabinet may be at odds with itself as to how it may proceed. There are clearly different forces at work. Some of the members of the Cabinet may well agree with demands to establish a new inquiry but there are forces such as the Ministry of Defence, who would be against it."
Yesterday seven IRA prisoners were transferred from Britain to the Irish Republic. They included five men who six months ago were jailed for 35 years for planning to blow up British power-stations in 1996, and members of the "Balcombe Street gang", who were responsible for 16 killings in England in the 1970s.Reuse content