Denis Donaldson was expelled from
Sinn Fein in December
Mr Donaldson was expelled from the party last December after admitting he was a paid British spy for 20 years.
The IRA issued a statement saying it had "no involvement whatsoever" in Mr Donaldson's death in County Donegal.
Irish prime minister Bertie Ahern described the death as a "brutal murder", while NI Secretary Peter Hain said it was "barbaric".
Sinn Fein leader Gerry Adams said he wanted to "disassociate (his party) and all republicans who support the peace process from this killing".
The death of Mr Donaldson came hours before a planned visit to Northern Ireland by Prime Minister Tony Blair and Mr Ahern to unveil their blueprint for reviving the assembly at Stormont.
A Downing Street spokesman said that Mr Blair "strongly condemned" the killing and had noted Mr Adams' statement of condemnation.
TIMETABLE OF EVENTS
4 October 2002: Three men including Mr Donaldson arrested following raid on Sinn Fein's Stormont office. Power-sharing executive collapses and government restores direct rule to NI a week laterIrish justice minister Michael McDowell said he understood a neighbour had found Mr Donaldson's body on the floor of his house with a gunshot wound to the head.
8 December 2005: Charges against three men dropped "in the public interest"
16 December 2005: Sinn Fein says Mr Donaldson was a "British agent" and expels him from the party: he later says he worked as a spy since the 1980s Government and police reject the party's claim raid was politically motivated
4 April 2006: Donaldson found shot dead in County Donegal
He said that he had been lying there for some time and was last seen alive on Monday evening by Irish police.
Mr Donaldson moved out of his Belfast home last December, and had been living in a run-down cottage without electricity or running water in County Donegal.
His body was found near the village of Glenties at about 1700 BST.
Mr Donaldson had been Sinn Fein's head of administration at Stormont before his 2002 arrest over alleged spying led to its collapse.
Mr Donaldson and two others were acquitted of charges last December "in the public interest".
One week later, Sinn Fein expelled Mr Donaldson from the party.
At the time, he told a news conference that he was recruited in the 1980s as a paid British agent and deeply regretted his activities.
He said there had not been a republican spy ring at Stormont.
Gerry Adams told the same news conference that Mr Donaldson was not under any threat from the republican movement.
Mr Adams said on Tuesday he had spoken to the Donaldson family just before news of his death broke.
He said he was not prepared to speculate on who might have been responsible.
"It has to be condemned. We are living in a different era, and in the future in which everyone could share," he said.
"This killing seems to have been carried out by those who have not accepted that," he said.
DUP leader Ian Paisley said Mr Donaldson's death would be a setback for the political process.
"If this man has been murdered because of his connection with the IRA/Sinn Fein, and because of the past happenings, then it strikes a blow at what the two governments are trying to do," he said.
