Prime Minister David Cameron has announced a full judge-led inquiry into the issue of on the the run letters issued to IRA suspects.
Speaking at Downing Street on Thursday afternoon, he announced he will appoint an independent judge to review the Northern Ireland secret letters row by end of May.
The Prime Minister said he accepted calls for a "full, independent examination" of the process after DUP First Minister Peter Robinson threatened to resign.
Details of 187 letters sent to so-called on-the-run republicans (OTRs), assuring them that they would not be prosecuted if they returned to Northern Ireland, emerged when a case against a man charged with the 1982 IRA Hyde Park bomb collapsed.
"I agree with the First Minister of Northern Ireland that, after the terrible error in the (John) Downey case, it is right to get to the bottom of what happened," Mr Cameron said.
"The case has already been referred to the Police Ombudsman but, as the First Minister has said, we should have a full, independent examination of the whole operation of this scheme.
"So I can announce today that we will appoint an independent judge to produce a full public account of the operation of this administrative scheme to determine whether any other letters were sent in error."
Prime Minister David Cameron welcomes German Chancellor Angela Merkel ahead of press conference
The judge will be given "full access to government files and officials" and will report by May, Mr Cameron said, with the findings being published.
The First Minister, who has claimed he and other Stormont ministers were kept in the dark over the OTR deal, said yesterday he would walk away from the coalition Executive if a judicial inquiry was not called and the letters rescinded and gave ministers 24 hours to respond.
Details of the OTR deal emerged during the failed prosecution of John Downey, from Donegal, over the Hyde Park attack.
Sinn Fein's Martin McGuinness and Gerry Kelly pictured at Stormont this morning
The 62-year-old denied murdering four soldiers in the 1982 bombing in London.
The case against him was ended because Government officials mistakenly sent him a letter in 2007 telling him he was no longer a wanted man.
Mr Cameron repeated his view that the Downey case involved a "dreadful mistake made by the PSNI".
"It is important to set out the facts of what has happened," he said as he addressed the issue at a Downing Street press conference following talks with German chancellor Angela Merkel.
"When we came to power in 2010, we inherited a process where letters were sent, setting out the factual position on whether or not some individuals were wanted for questioning by the police.
"This process continued under this government. There was never any amnesty or guarantee of immunity for anyone, and there isn't now."
He went on: "It is right that we take swift action but let us also remember that Northern Ireland has made great strides forward as a result of the peace process.
"It is vital that we deal properly with the events of the past but make sure this never undermines our determination to build a
Earlier on Thursday, Responding to DUP First Minister Peter Robinson's threat to resign over the issue - a move that would trigger an Assembly election - the Sinn Fein Deputy First Minister Martin McGuinness insisted such drastic action would achieve nothing.
"I think Peter is well aware of my view that this is a time for steady leadership, this is a time for calm nerves, this is a time for solutions to the present scenario we find ourselves," he said.
"This is certainly not the time - though I don't fear it at all - for an election."
Mr McGuinness said he would never voluntarily walk away from the devolved institutions.
"I will never resign," he said after meeting Northern Ireland Secretary Theresa Villiers to discuss the issue.
On the run republicans: Unionists must have known all along, insists Gerry Kelly
Sinn Fein is standing by its position that John Downey should never have been arrested as political outrage grew across the UK that almost 200 on-the-run republicans have been granted so-called 'get out of jail free' cards.
The party has poured scorn on unionist claims they knew nothing about the controversial 'comfort letters'.
North Belfast MLA Gerry Kelly was deeply involved in the process of securing the letters for former IRA members.
He said that unionists – including the First Minister Peter Robinson – must have known about the deal.
He said: "It was very public and for the unionists to claim they knew nothing about it is false.
"(Mr Robinson) knew about the OTR situation, he knew they were crucial to the peace process and the political process. He is foolish and needs to be careful as a political leader painting himself into a corner on the issue."
He was backed by fellow MLA Alex Maskey who said the letters issued by the Northern Ireland Office to the 187 former paramilitaries were "sought and given in good faith, and accepted in good faith".
He said people have to come forward and ask if they are still being sought by the authorities.
Mr Maskey said the issue had been raised at talks after talks, adding that leading unionists were aware of the letters. He pointed out it had been mentioned in the 2009 Eames-Bradley Report on dealing with the past.
Referring to Peter Robinson's threat to quit over the issue, he commented: "Peter can resign if he wishes, but that is still not going to address the past."
Sinn Fein president Gerry Adams insisted that "both governments gave firm commitments" to deal with on-the-runs cases.
"A process was put in place to deal with outstanding cases, including that of John Downey," he said.
"The arrest of John Downey by the London police was in clear breach of this and of the commitments given by the British Government in 2004, during the peace process negotiations at Weston Park and in subsequent negotiations.
"John Downey should never have been arrested and this has been vindicated by the court decision."
Earlier yesterday, Deputy First Minister Martin McGuinness indicated that he felt unionists were overreacting when he issued a message on Twitter urging them to "calm down".
The leading Sinn Fein politician posted: "My unionist colleagues need to calm down.
"We've all come a long way.
"No sensible person will thank anyone for threatening the institutions."