According to two senior loyalist sources, the ex-soldier - believed to have been a member of the covert Force Research Unit (FRU) - also shot and killed Sinn Féin politician Bernard O'Hagan four months after the Fullerton murder.
And our sources further said they believe the FRU agent gave the go-ahead for the UVF petrol bomb attack which claimed the lives of the three young Quinn brothers in the early hours of July 12, 1998.
A married man with six children, Eddie Fullerton (56) was gunned down at his home at Cockhill, Buncrana, on May 25, 1991.
And yesterday, Mr Fullerton's 82-year-old widow Diana thanked the Sunday World for bring the new development to her attention.
Last Sunday, gardaí in Donegal arrested a 56-year-old Northern Ireland man in connection with the shocking murder.
The detained man - who was later released without charge - has no known links to the individual referred to in this article.
But he was questioned for several hours by Garda detectives in Letterkenny about the alleged possession of a gun in the border region around the time of Fullerton's murder 30 years ago.
A file is now being prepared and it will be forwarded to the Director of Public Prosecutions in the Republic.
Diana Fullerton, who was present when her husband Eddie was murdered in their family home, said: "To tell you the truth, when I heard about the arrest, I just thought 'so what'? I rarely read anything about Eddie's case these days, because it never seems to go anywhere."
And Eddie's daughter Mandy (58) said she believed there were major gaps in both the Garda and RUC investigations.
"An eyewitness told us he saw three men in camouflage clothing getting into an unmarked RUC car in Culmore minutes after my daddy's murder, but we were never told about it."
She said she was interested to hear the findings of the Sunday World investigation and added that she would be passing on the information to her solicitor.
But this week - in an exclusive interview with the Sunday World - a veteran UDA leader reveals why the loyalist terror group now believes Fullerton's killer was working for British military intelligence.
"We had a number of investigations into this man's activities. And they all came to the same conclusion - he was a British military intelligence agent. It's as simple as that," he said.
"We believe he was one of the agents ordered to infiltrate loyalist paramilitary organisations in the early 1990s."
And the top loyalist also revealed that less than four months after the Fullerton murder the suspected Force Research Unit agent gunned down a second Sinn Féin politician.
Bernard O'Hagan (38) - who served on Magherafelt Council - was shot dead as he arrived for work at Magherafelt College of Further Education on September 16, 1991.
Delivering the oration at his funeral, Belfast Sinn Féin Councillor Joe Austin said a number of republicans had been killed as part of a renewed "counter-insurgency strategy".
He told mourners: "It was British military intelligence which set up our friends and comrades for assassination and which provided the information and direction to their killers."
Mr Fullerton had emigrated in the 1960s to Scotland and then England, but returned to Donegal 23 years later with his Birmingham-born wife and six children.
Mr Fullerton had been a councillor 12 years when the UDA singled him out for assassination.
It is thought the loyalist terror group in the north west knew that assassinating a republican politician in the Republic would be a immediate headline grabber.
And the UDA Brigadier for North Antrim and Londonderry was keen to test the military capacity of a former British soldier who recently applied to join the UFF.
On leaving the Army, he returned to Derry where he soon made contacts with loyalists on the fringes of the UVF.
But when the UFF offered him a chance to join, he jumped at it.
On the night of the Fullerton murder, the UFF hit squad hijacked a car around midnight from a family home in Buncrana.
The family were held hostage while the killer gang headed the short distance to the Fullerton home at Cockhill Cottages on the northern side of the town.
After sledgehammering the door shortly after 2am, two UFF gunmen confronted the Sinn Féin man, who had been in bed sleeping, as he scrambled down the stairs to investigate the noise.
The stolen car was later found burnt out at Culmore near the border.
But according to the UDA source, speculation that an inflatable RIB used to spirit the killers back into Northern Ireland was well wide of the mark.
"The truth is the UFF team drove themselves home in a stolen Skoda car. But in those days Skodas were notoriously unreliable and the getaway car broke down three times," he said.
He added: "It's seldom as glamorous as it sounds. The men were forced to get out and push the Skoda to get in restarted."
Eddie Fullerton's killing sparked widespread shock on both sides of the border. The Sinn Féin man was an immensely popular figure in the council chamber and political opponents paid fulsome tribute to him when he died.
Dr James Mehaffey, the Church of Ireland Bishop of Derry and Raphoe, said at the time he knew Mr Fullerton well and had great respect for the work he did for the people of Donegal.
And a junior Irish minister attended his funeral.
But before the end of the following month, the IRA evened up the score by murdering a senior UDA man and loyalist politician in Derry.
On June 29, UDA commander Cecil McKnight (32) was sitting in his living room at Melrose Terrace in the Waterside when an IRA gunman shot him through the window.
He was chatting to two police officers who were warning him his life was a risk when the fatal shots rang out.
And in August, Cecil McKnight's friend and loyalist comrade, 27-year-old Gary 'Lofty' Lynch, was also shot dead when the IRA ambushed him going to work. He had been a pallbearer at McKnight's funeral.
But the double killings of two well-liked Sinn Féin politicians greatly enhanced the former Army man's reputation in UDA circles.
And it wasn't long before UDA Brigadier Billy McFarland asked him to take command of the UFF in Derry and surrounding area.
But things came a cropper for him soon afterwards when he was charged and convicted of armed robbery and sent to jail.
Amid growing loyalist tensions inside the prison, the Army man fell out with UFF Brigadier Billy McFarland, who was also in jail on an unrelated matter.
"The man we now believe to have been an Army agent appeared to have designs on taking over the leadership reins of the Brigade in the north west, but that was never going to happen," said the UDA source.
On his release, the now suspected FRU agent drifted back towards his former friends in the UVF. And after moving away from Derry, he joined the UVF in Ballymoney, where he soon became head of the paramilitary group.
Drug dealing was a regular means of raising funds at the time. And he oversaw the sale and distribution of ecstasy tablets on loyalist estates.
But he was also keen on throwing his weight around and one man we spoke to this week remembers him attacking a UVF supporter living in the Carnany estate.
"He beat this man within an inch of his life. The man had been his close friend for a while and he had been a life-long supporter of the UVF.
"But the public humiliation of being kicked up and down the estate where he had been brought up was just too much to take. He soon moved away," said the Carnany resident.
Others loyalists in Carnany today speak openly about how the Army man gave the order for the petrol bomb attack on the Quinn family home in the early hours of July 12 1998. The attack resulted in the deaths of three young Catholic schoolboys.
Richard (10) was the eldest of three brothers who died when their family home was petrol bombed the UVF. Mark (9) and Jason (8) also died in the shocking attack.
One man, Garfield Gilmour - who died two weeks ago - was convicted of driving the murder gang to and from the scene.
But the UVF killer team and the former British soldier who gave the order to attack the Quinn home escaped justice.
Two years later, in May 2000, after guns were found in the Progressive Unionist Party offices in Ballymoney, he was dismissed from the UVF and ordered to be shot.
He was later wounded when a UVF team ambushed him near his home.
A Sunday World investigation into the suspected British Army agent revealed he is still living in Northern Ireland with his wife and family.
But his former comrades in both the UDA and UVF are firmly convinced he's a former FRU agent.
"I'm just surprised it took us so long to spot this. He made sure everyone knew he had been involved in bother the Fullerton and O'Hagan murders.
"But we now firmly believe he was an Army agent all along," said the leading UDA figure.
And a UVF source said: "Hindsight is a wonderful thing, but this man ticks all the boxes to be a FRU agent. We are now convinced we were also duped by him."