Garda Commissioner Noirin O'Sullivan has been ordered to carry out an urgent report into the activities of the IRA - just months after denying the Provos' existence.
Her credibility is now on the line after Irish Justice Minister Frances Fitzgerald demanded that the IRA threat be reassessed in light of the murder of Kevin McGuigan.
Senior gardai admit the Commissioner's claim that the force has no "information or intelligence" on IRA activity was a grave mistake.
Despite the deep unease her stance has caused within political and Garda circles, Ms O'Sullivan last night said her position "remains the same".
The extraordinary events in Irish political and security circles came after PSNI Chief Constable George Hamilton confirmed IRA involvement in the brutal murder of Mr McGuigan in east Belfast.
The revelation has left the future of the Stormont power-sharing Executive in serious doubt and the reputation of senior Sinn Fein figures in tatters.
In a fresh twist yesterday, the Irish Justice Minister was forced to abandon her line on the Provos as a result of the tough stance adopted by Irish Labour Party ministers.
Ms Fitzgerald issued a 900-word statement on the IRA's re-emergence.
While insisting the its military capabilities have been "lost", Ms Fitzgerald admitted that people connected with the IRA "continue to be associated with serious crime".
"There is no doubt that people who have been associated with PIRA have been - and continue to be - involved in the most serious crime and neither Gerry Adams nor Sinn Fein can wash their hands of responsibility for that. It is an inevitable legacy of the brutal campaign which PIRA waged," she said.
She also challenged Mr Adams, who denies ever being an IRA member, to apologise for its legacy.
In one of her most significant moves since being appointed Irish Justice Minister, Ms Fitzgerald ordered Commissioner O'Sullivan to conduct a "fresh assessment" of the IRA's structures.
"I have asked the Garda Commissioner to liaise closely with the PSNI and carry out a fresh assessment of the status of PIRA in the light of any new evidence emerging during the PSNI investigation into the death of Mr McGuigan."
Senior Garda sources have said that Ms O'Sullivan displayed a serious misjudgement by releasing a letter last February which completely denied an IRA existence.
The letter was released to Sinn Fein's justice spokesperson Padraig Maclochlainn, who took issue with an article by Sunday Independent journalist Jim Cusack which claimed IRA structures remained in place and that its figures were still involved in criminality.
In response to Mr MacLochlainn, Ms O'Sullivan said: "An Garda Siochana hold no information or intelligence to support the assertion of Mr Cusack that "the Provisional IRA still maintains its military structure and confines its criminal activities to fuel laundering, cigarette-smuggling and counterfeiting".
A spokesman for the Commissioner said last night her "Position remains the same - An Garda Siochana has nothing to add to assessments which it has made previously about PIRA insofar as this jurisdiction is concerned and as there is an ongoing Police Service of Northern Ireland investigation into a killing in Belfast does not consider it would be helpful to make any further comment at this time."