British Intelligence printed and circulated fake CIA identity cards in Northern Ireland in the early 1970s in an attempt to discredit the U.S. spy agency, according to a former senior official in the British Army.

According to the official, Colin Wallace, the point of the bizarre counterfeiting operation was to link the Central Intelligence Agency with the outlawed Irish Republican Army, which has carried out terrorist attacks for years in hopes of forcing the British out of Northern Ireland. Wallace was a senior information officer at British Army headquarters in Lisburn in the late 1960s and early 1970s.

Wallace claims to have seen the phony ID cards printed and photocopied. In a report to Prime Minister Margaret Thatcher in 1984, he explained why British officials were anxious to discredit the CIA. "I can recall the quite strong feeling in British Intelligence circles that the CIA had not only turned a blind eye to arms smuggling from the USA to the IRA, but also encouraged it," he wrote.

Our reporter Lisa Sylvester has seen an excerpt from Wallace's confidential report, as well as copies of the fake ID cards. One card, dated November 1972, contains the statement: "This Certificate of Credentials is issued under the authority of the Central Intelligence Agency. It is requested that the bearer be afforded the necessary help to enable him to satisfactorily discharge his duties."

Wallace said two different cards were forged and circulated. "They were designed to create the impression that the CIA was active in Northern Ireland. The rumor was that American intelligence believed the IRA could come under control of Eastern Bloc countries who would supply weapons and ammunition," he told us.

Wallace said he left the service because he objected to efforts by British Intelligence to discredit and oust then-Prime Minister Harold Wilson. Wallace's claim of a disinformation campaign against Wilson by British Intelligence coincides with charges made by Peter Wright, a former intelligence official. Wright's book detailing the charges has been banned in Britain.

Wallace said he first made allegations about improper British Intelligence operations in a report to a deputy minister in Parliament in 1975. Since then, he has been charged with murder and convicted of manslaughter, and has served six years in prison. Wallace, who was released last December, said he was set up on the homicide charge to shut him up.

William Colby, who headed the CIA at the time, told us he had never heard of the alleged forgery of ID cards. He would not discuss CIA operations that might have been going on in Northern Ireland, but pointed out that CIA agents on covert assignments do not carry cards identifying themselves as such.

"But it's not a question of what the CIA would do," Wallace said. "It's what the people in Northern Ireland believed."

The Protestant majority in Northern Ireland has long believed that Catholic Irish Americans are the IRA's main support. Faked evidence that the CIA assisted in this support would conceivably discredit U.S. efforts on behalf of the Catholic minority. Why British Intelligence would encourage this is not clear.