STORMONT First Minister Peter Robinson lifted his threat to resign over the controversy about on-the-run republicans after British prime minister David Cameron announced a judicial review.
The Democratic Unionist Party leader stepped back from the brink after accepting assurances from London over letters sent to more than 180 individuals advising them they could return to the North without fear of prosecution.
Mr Cameron said he accepted calls for a "full, independent examination" of the process.
"I agree with the First Minister of Northern Ireland that, after the terrible error in the Downey case, it is right to get to the bottom of what happened," he said. The judge will be given "full access to government files and officials" and will report by the end of May, with the findings then published.
But further tensions emerged last night as it was claimed 250 British soldiers face being stripped of their anonymity and interviewed again for a new criminal investigation into the Bloody Sunday killings.
Soldiers must testify again because evidence given to the Saville Inquiry is not admissible in a criminal investigation.
General Richard Dannatt, former British Army head, said it would be "an outrage" to prosecute soldiers if IRA fugitives had won secret immunity deals.
The political crisis in the North began when details of 187 letters emerged, after the case against a man charged with the 1982 IRA Hyde Park bombing collapsed earlier this week.
John Downey (62), from Co Donegal, denied murdering four soldiers in the attack in London.
The case against him was ended because officials mistakenly sent him a letter in 2007, telling him he was no longer a wanted man. This shone the light on a wider policy of sending such letters, with unionist politicians reacting with fury, claiming the scheme was operating without their knowledge.
The British government said it would be making clear to all those who had received a letter that if evidence existed – or emerged in the future – which linked them to an offence, they could still be prosecuted.
Mr Robinson said this represented a key change to how the scheme had operated before: "I think that makes it clear that they have a fairly worthless piece of paper. I think there will be a lot of on-the-runs who will sleep less easy tonight."
Sinn Fein has insisted that those republicans who received letters only got them because the police were not seeking them in connection with offences, and therefore the documents did not amount to an amnesty.
SF's Martin McGuinness said a number of other republicans who had applied were denied letters, and told they would be arrested if they entered the UK.
Last night, Tanaiste Eamon Gilmore welcomed the British government's judicial review.