Controversy over the alleged shoot-to-kill policy in Northern Ireland caused grave implications to cross-Border co-operation while Anglo-Irish relations suffered a "serious setback".
Justice minister Gerard Collins told a special meeting of the Anglo-Irish Intergovernmental Conference in February 1988 it was "impossible to exaggerate the seriousness of the shoot-to-kill policy".
Mr Collins said the special meeting at Stormont Castle in Belfast was called after "very serious concerns" shared by all sides.
The meeting came after the British attorney general made a public statement about the Stalker inquiry.
"This statement, which admits evidence of obstruction of justice, amounts to declaration that in Northern Ireland, at any rate, the rule of law takes second or possibly third place to non-defined public interest and matters of national security," Mr Collins said. "That's the scene as it is and how my Government sees the implications of failing to prosecute."
Two British senior policemen, John Stalker and Colin Sampson, investigated a series of incidents which resulted in the killing of three Royal Ulster Constabulary (RUC) officers and weeks later six unarmed nationalists. The two highly classified reports have never been released to the public.
These incidents became known as the controversial shoot-to-kill deaths, during the darkest days of the Troubles in the mid-1980s.
Mr Collins said: "It casts a dark shadow over the RUC and has the gravest implications for cross-Border co-operation with the gardaí, apart from its impact on relations between the RUC and nationalists in Northern Ireland."
Mr Collins said while he sympathised with RUC members who had been killed, he urged British authorities to ensure their security forces did not "descend to the level and methods of terrorists".
If the RUC was known to have been shielding officers "strongly suspected of serious crime", this would have an impact on community support in the Republic.
Individual gardaí might have had reservations about sharing information with the RUC if they were not fully confident about how it would be used.
"The British government has done very serious damage to confidence and co-operation and I believe there is a very great responsibility on it to put the matter right," he said.
An Irish Government memo states the failure to publish the report in full created even greater unease.
UK secretary of state Tom King said it was a police investigation and it was "not the practice" to publish these.