James Lawson, 40, was shot several times at his home in Hook, Hampshire, on Monday night. Armed police were called after neighbours heard three shots and Mr Lawson was taken to hospital where he died several hours later.
Last night, it was claimed that Mr Lawson - whose real name is believed to be Peter McNeil - had been moved to Hampshire from London by the police after turning "grass" at a drugs trial.
It is believed he was a key informer in a Scotland Yard investigation which broke a cocaine ring involving the Mafia, a Columbian drug cartel and possibly the IRA.
A Hampshire police spokeswoman said a contract killing was one of several lines of inquiry that police were pursuing. She refused to confirm claims that the victim was a police informer.
Neighbour Mike Brunger said police and paramedics rushed to the scene after the attack. "They said there had been an incident across the way, a gentleman had been shot in the head at close range and it was a professional hit," he said.
The dead man was unmarried but neighbours said he had a woman friend who was frequently at the house which he rented.
One, who attended a 40th birthday party at his house, said: "He was a friendly bloke and his girlfriend was often there. He always had cars outside and motorbikes and he rode a bike himself."
Another neighbour said: "He always seemed to have a lot of visitors at his house and he was always dealing in cars."
A member of the staff at a local public house said: "He used to flash around a lot of money in here and one day came in with what must have been pounds 12,000 in cash."
A squad of 25 detectives was set up to investigate the murder and police were last night studying tapes from a closed circuit television at a nearby community centre to see if they had picked up the gunman fleeing from the scene.Reuse content