What renegade MI5 officer David Shayler did next...

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The renegade MI5 officer who blew the whistle on his former colleagues is now living in a squat, dressing as a woman, and railing against the 'Zionist empire'.

With its trout stream, village cricket pitch and sedate tearoom, Abinger Hammer is a quintessential slice of village England. Recently, this jewel of the Surrey stockbroker belt has added a more unconventional element to its list of attractions – a 6ft transvestite squatter called Delores Kane who believes he is the Messiah and happens to be Britain's best-known renegade former spy.

A short distance from the home of the novelist E M Forster, David Shayler and his miniskirt-clad alter ego have taken up residence in a 17th-century National Trust farmhouse after a decade of spiritual contemplation which has led the one-time MI5 officer to the conclusion that he is the reincarnation of Jesus Christ and that all of humanity's ills can be cured by a four-year programme of hemp cultivation.

For the man who came to public attention in spectacular fashion 12 years ago by lifting the lid on a catalogue of dark deeds allegedly carried out in the name of Queen and Country by the intelligence services, it is a reinvention every bit as dramatic as his claims that MI6 funded Islamist fighters to assassinate Libya's Colonel Gaddafi and that MI5 failed to keep track of an IRA bombing cell – revelations that ultimately forced him into exile and earned him two spells in prison.

But as he came to the door of the salubrious squat close to Guildford dressed as Delores in a blonde wig, sheer black tights, a leopard skin skirt and a cropped top with prosthetic breasts, before explaining that the world as it is known will end of 23 December 2012, it is perhaps clear why some of his former friends are concerned that he has suffered some form of mental collapse.

Sat on a floor cushion in a fug of joss stick smoke in the sitting room of Hackhurst Farm, a 400-year-old rural idyll at the end of a country lane which he has occupied since last month with a group of eco-campaigners, the 43-year-old former spy outlined his journey from an atheist in charge of MI5's Libya desk to the stiletto-heeled messianic proclaimer of a crusade to dismantle a "Zionist empire", whose control is apparently exerted over the planet by nefarious means from vaccines to mortgages.

Far from being unwell, Mr Shayler insisted he was merely following the same instincts that persuaded him to blow the whistle on the alleged misdeeds of MI5 and MI6 in 1997 – and illegally print extracts from Spycatcher while a student – by bringing into the open unpalatable "facts" about the state of humanity.

He said: "I am absolutely well. I have not had a breakdown. My job in MI5 was to stop terrorism and violence. What I saw within the service showed that was not always the case and I had the courage to stand up and tell the difficult truths about what was going on.

"I have spent my life telling difficult truths and now I am in the same situation again. I am the latest reincarnation of the Christ and live a life of unconditional love. Suddenly my whole life makes sense. By exercising the common law right of free will, we can all break out of the system that has enslaved us, started wars and left us mired in debt."

Looking much thinner than the rotund spy who spent four months in a French prison without charge in 1998 and was then later sentenced to six months' imprisonment in Britain for breaching the Official Secrets Act, Mr Shayler is fond of expounding on the many "signs" (from biblical codes to the film The Da Vinci Code) which he says have proved him that he is the current incarnation of the Messiah – a role he says was previously performed by King Arthur, Mark Antony, Macbeth, Lawrence of Arabia and his immediate predecessor as the embodiment of Christ, Che Guevara.

Between drags on a roll-up cigarette, he explained how the engravings on the Rod of Aaron, the staff carried by Moses' older brother in the Old Testament, contained an anagram of "David Shayler, Righteous King".

Referring to the moment on 29 June 2007 when he said he realised his divinity after a premonition that he had stopped a bomb attack on a London nightclub, he said: "It was a deeply, deeply humbling experience. I felt this incredible energy, way beyond any sexual or physical experience. It was way, way beyond where I had been before.

"What do you do in those circumstances? I fell to my knees and prostrated myself. I had become the spirit of Jesus."

Some 12 years after he first revealed the details of intelligence service operations to the Mail on Sunday for £40,000 – including claims that MI5 kept files on senior Labour Party figures in the early 1990s and ignored warnings of an attack on the Israeli embassy which subsequently took place – Mr Shayler's transformation has revived suggestions that he is as much a showman as an earthly cipher for "difficult truths".

One former counter-terrorism official told The Independent: "It would not be right to form any opinion about his current state of mind. But [David Shayler] chose to go public in 1997 and he made it clear that he was going to make the most of it. I suppose the question is whether that was underpinned by some inner need for spectacle."

Whatever his motivation, the result is a bewildering mishmash of conspiracy, practicality and spirituality that wanders from the well-trodden hypothesis that 9/11 was "an inside job" to the idea that widespread planting of hemp as a source of food, drugs and building materials would provide a sustainable basis for all human life within four years.

Alongside disarming frankness about his transvestism (Delores is the manifestation of a clothes-swapping habit that dates back to his teenage years and his conviction that "Jesus is a tranny"), Mr Shayler outlines how Castrol GTX adverts are a subliminal reference to God, and Gaia, the spirit linking all life, will rise up in December 2012 and reshape the cosmos.

He is also complimentary about David Icke, the former BBC sports presenter who has gone before him in revealing himself as Jesus's reincarnation before suggesting the world is controlled by shape-shifting lizards. Mr Shayler said: "David has done some enormously important work. I see him as the John the Baptist to my Christ. I have spoken to him on the phone and suggested we meet."

Those who know the former MI5 operative, a fanatic Middlesbrough FC fan who also believes his channelling of "unconditional love" propelled his side into the 2006 Uefa Cup Final, believe he is paying the psychological price for the years of media pressure and pursuit by the authorities. Annie Machon, his former girlfriend, said: "I believe David is a good and honorable man but he has had some form of severe breakdown. I do blame the Government and the intelligence agencies for what he had become."

Psychologists warned that the espousal of unusual beliefs should not be interpreted as proof of mental illness. Simon Gelsthorpe, a clinical psychologist based in Bradford, said: "A lot of research over the last decade has looked into the occurrence in the normal population of traits that society has traditionally seen as a mental illness. Hearing voices is way more common than we had thought, as is the holding of unusual beliefs. A lot of these so-called indicators of mental illness are in fact relatively common and part of normal life."

For his part, the former spy and self-confessed user of cannabis and magic mushrooms is unapologetic in his certainty that he is now the subject of a higher calling: "I don't give a fuck what other people think of me. A bloke in a frock is whole lot less offensive than blowing up innocent people in Iraq and Afghanistan."

Whistleblowers: The intelligence service renegades

*Peter Wright

The former principal science officer of MI5, pictured right, provoked a crisis in intelligence circles with the publication in 1987 of Spycatcher, his incendiary memoir outlining claims that the Security Service plotted to remove Harold Wilson from office and its Director General, Roger Hollis, was a Soviet spy. Margaret Thatcher's government fought a long and ultimately pointless legal battle to prevent publication, propelling worldwide sales beyond 2 million copies.

*Richard Tomlinson

The New Zealand-born MI6 agent, far right, was a star recruit to Britain's overseas intelligence agency, serving in Bosnia and infiltrating Iranian intelligence. But a glittering career was abruptly ended in 1995 when he was sacked for reasons that remain unexplained and prevented from taking his case to an employment tribunal. He was arrested in 1997 for breaching the Official Secrets Act on the basis of a four-page synopsis of a tell-all book on his service and jailed for 12 months. He told the Princess Diana inquest that MI6 trained its officers in the use of strobe lights to cause traffic accidents.

*Cathy Massiter

Middle-ranking MI5 officer lifted the lid on its surveillance of trade unions and organisations such as CND in the 1980s. She revealed in a documentary that the service bugged the phones of Patricia Hewitt, former health secretary, and Harriet Harman, deputy Labour leader, because they were suspected Communist sympathisers.

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