He was hit in the back by a single high-velocity bullet as he checked a car at a permanent vehicle checkpoint in Bessbrook, a village which houses one of the main British Army bases in the area.
A woman in the car was injured. She was taken to Daisy Hill hospital in Newry, suffering from lacerations to her head from flying glass. Two other people were treated for shock.
The soldier's death will increase fears that Northern Ireland is sliding back towards full-scale violence in the political vacuum before the next general election. The most immediate concern is that loyalist groups will now break their already strained ceasefire.
The shooting is the latest in a series of attacks as the IRA has steadily cranked up its campaign of violence. The fact that a soldier was killed may put paid to reports that the terrorists were engaged in a "phoney war" aimed at demonstrating their violent capabilities rather than actually taking life.
The soldier was the second to die since the ending of the IRA ceasefire a year ago last weekend. The first military fatality came last October when Warrant Officer James Bradwell died in an IRA bomb attack at the Army headquarters at Lisburn, Co Antrim.
Up to now, South Armagh, which is regarded as an IRA stronghold, had played no part in the renewed campaign. This attack will therefore be seen as an ominous sign that the IRA is gradually re-activating all its units. The likelihood of attacks in Britain is also regarded as high.
The use of what was clearly a high-powered rifle will confirm County Armagh's reputation as one of the most dangerous areas for the security forces. It also appears to confirm that they have yet to develop effective counters to the lethal activities of IRA snipers in the region.
The attack was condemned by the Northern Ireland Secretary, Sir Patrick Mayhew, as "a coward's attack which pointed up the cynical contrast between the words of peace and the crimes of murder." John Major said "the total hypocrisy of Sinn Fein's talk of peace is yet again fully exposed".
The MP for the constituency, the SDLP deputy leader Seamus Mallon, said: "Given the level of violence in recent weeks it was inevitable that lives would be lost. A man's life was taken in a cold pre-meditated way."
The shadow Northern Ireland Secretary, Marjorie Mowlam, said: "This is a sad, sad day in the efforts to bring peace to Northern Ireland. I plead with the loyalist paramilitaries not to plunge the people of Northern Ireland into a downward spiral of violence."
Earlier, a high-powered assault rifle was found in a nationalist housing estate in Lurgan, Co Armagh.
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