The political party that heads the Irish government has launched a barrage of criticism of Martin McGuinness's IRA past as he campaigns to become President of the Irish Republic.

In one of several heated exchanges between Mr McGuinness and senior members of Fine Gael, the senior partner in the Republic's ruling coalition, the Sinn Fein figure was described as a terrorist who benefited from a bank robbery carried out by the IRA. Mr McGuinness responded that he was the victim of dirty tricks and a black propaganda campaign.

Of the seven candidates in the presidential race Mr McGuinness is currently placed third by Dublin bookies. By contrast, the Dublin politician Gay Mitchell, who is standing as the Fine Gael candidate, is lagging in fifth place.

Although his party has potentially the most powerful political machine, Mr Mitchell is regarded as an unexceptional figure whose campaign has yet to take off.

So far the many attacks directed at Mr McGuinness have largely come from the media, but now that the campaign is in full swing his opponents have joined the fray.

Mr McGuinness has recently introduced a more conciliatory note to traditional republican rhetoric, saying that his heart went out not just to the families of republicans who were killed in the Troubles but also to the relatives of British soldiers who died.

At the weekend he told The Independent that he accepted that IRA killings of innocent people could be described as murder.

Mr Mitchell disputed Mr McGuinness's assertion that he has not been a member of the IRA since the 1970s and that he lived on the average industrial wage. And Phil Hogan, Minister for the Environment, described the Sinn Fein figure as "a terrorist", saying corporate investment in Ireland could dwindle if Mr McGuinness became President.

Another government figure said: "I wouldn't trust Martin McGuinness to take my dog for a walk." Referring to the republican's pledge to draw only an average salary if elected, he asked: "Why would you need your salary when you have the proceeds of the Northern Bank at your disposal?"

This was a pointed reference to the IRA robbery at the Northern Bank in Belfast in 2004, when £26m was stolen.

The McGuinness campaign described the bank claim as "outrageous, flippant, idiotic and without merit". One spokesman said: "I didn't think senior government ministers would go on national radio and give interviews to newspapers and make attacks without foundation.

"It's a sign of desperation and political naivety on behalf of the government."

Mr McGuinness said the criticisms demonstrated that Fine Gael was suffering from paranoia. He declared: "They have launched ridiculous and bizarre allegations against me. Of course these are all rubbish."

He said that as Northern Ireland's deputy first minister he had helped bring in thousands of jobs.