Peter Keeley, also known as Kevin Fulton, gave evidence before the inquiry for the third day.
Mr Keeley said that after the Omagh bombing, convicted IRA man Patrick “Mooch” Blair was targeted by his MI5 handlers, but intelligence efforts were “thwarted.”
“I came to the conclusion he walked on water, so more or less an agent,” Mr Keeley told barrister Mr Michael Durack SC, representing the Garda commissioner.
The former British agent, who alleges a retired detective sergeant was involved in collusion with the IRA, completed his evidence after three days at the tribunal.
And Mr Keeley also said that Belfast republican Mr Freddie Scappaticci was an informer working for British intelligence.
Mr Scappaticci has denied he is the informant known as Stakeknife.
“In actual fact he is an informer and he is Stakeknife,” Mr Keeley said.
Mr Keeley said he and his estranged wife were “arrested” by an IRA internal security unit in 1994, and interrogated by Mr Scappaticci.
But he denied that he had simply named Mr Scappaticci in order to attract newspaper headlines, or was an attention seeker.
Mr Martin O’Rourke QC, who represents Mr Scappaticci, also said that Mr Keeley had published a book, produced art works for a London exhibition, and wrote to Warner Bros about a film story of his life involving Leonardo di Caprio.
But Mr Keeley said he was still anonymous, and no one knew where he was as he lived in a big city.
And he said he was not “driven by money”, but expected to be paid for the work he had done as a British undercover agent, saying “I’m not paid to be here at this tribunal today. Are you?”
The tribunal was set up to look at claims of Garda collusion in the IRA ambush which killed two senior RUC officers, chief superintendent Harry Breen and superintendent Bob Buchanan, as they returned from a meeting in Dundalk garda station on 20 March 1989.
Later, it emerged that Belfast republican Freddie Scappaticci may give evidence to the Smithwick tribunal in the New Year.
Mr Scappaticci denied he was the British agents known as Stakeknife, one of the most valuable British assets during the Troubles.
Solicitor Michael Flanagan applied for additional representation form Mr Scappaticci at the tribunal today, as former British agent Peter Keeley (aka Kevin Fulton) alleged that he and his wife were “arrested” by the IRA in 1994 and interrogated by Mc Scappaticci.
Mr Scappaticci also denies he was a member of the IRA internal security unit known as the “nutting squad”.
Mr Keeley said he had come to give evidence at the tribunal “because I had started something and I had to finish it”.
And he said there was “no mileage” in giving evidence that former Garda detective Owen Corrigan was a “mole” supplying information from within An Garda Siochana to the IRA.
Mr Corrigan denies the allegation, describing it as a monstrous lie.
Mr Keeley said his evidence would be seen as “treachery” by the IRA, and “they would kill me.”
The tribunal heard that a letter sent to Mr Keeley in 2001 said he was found guilty of treason and sentenced to death “to be carried out at our convenience.”
The letter was signed “P O’Neill, Óglaigh na hEireann.”