The startling revelation emerged this week days after Stone's surprise appearance at Stormont last Saturday, where he attended the Northern Ireland Orange Centenary rally and parade.
But in an interview today, retired businessman Jim Murtagh - a childhood friend of Stone - reveals how he and the Milltown massacre killer regularly visited Sands and his family when they lived on the Rathcoole estate in Newtownabbey.
And the boys often played football together.
Jim (67) explained: "It may seem strange now, but before the Troubles, Michael Stone's closest mates in the Braniel estate were Catholics. He has written about this in his book.
"Michael Stone was best friends with me and Jim Todd, who was Bobby Sands' cousin. We all lived in the Braniel estate and together we formed the now infamous, 'Hole in the Wall' street gang.
"Jim Todd's father Wesley - a Protestant from the Shankill Road - married May Kelly, a Catholic woman from the Markets area, who was Bobby Sands' aunt.
"Wesley drove a works van and he used to take his wife May to Rathcoole to visit her sister Roseleen, who was Bobby Sands' mother.
"And if it was a Sunday, their son Jim Todd, Michael Stone and I jumped into the back of the van and we'd go with them.
"Stone had no interest in football and he was useless at it. But the rest of us were football-mad and so too was Bobby Sands. And we always had a game of football with him when we went to Rathcoole to see his family.
"We'd stick Michael Stone in nets which consisted of two woollen jumpers for goalposts," said Jim.
But Stone's presence at Stormont has also sparked debate among former loyalists about the Milltown massacre man's true place in Protestant paramilitary history.
Last Saturday was Stone's first public outing since he was spotted at an anti-Protocol rally last year.
The 'Peace or Protocol' event in Newtownards last June coincided with the release of a new loyalist flag linking Stone with William of Orange and Sir Edward Carson.
A slogan along the bottom of the red, white and blue emblem, proudly declared: 'We Will Not Be the Generation to Fail Ulster'.
This week loyalist sources insisted Stone's appearance at Stormont demonstrated he was still committed to the loyalist cause.
As he inches towards old age, Stone remains one of the best-known loyalist figures in Ulster.
Youngsters queued eagerly for selfies with Stone, before his wife Karan eventually pushed him off in his wheelchair to continue watching the loyalist band parade further down the Newtownards Road.
"It's just nice to see people out enjoying themselves," Stone told the
Sunday World as he relaxed in the sunshine a short distance from Sir Edward Carson's statue overlook Stormont's manicured lawns.
Convicted of murdering three people and injuring another 60 at an IRA funeral in 1998, Stone also pleaded guilty to murdering three other people.
He was jailed for a total of 684 years, but was released in 2000 under the Good Friday Agreement.
But six years later, Stone was stopped by security staff on the steps of Stormont as he was about to spring a murder bid on republican leaders Gerry Adams and Martin McGuinness.
Stone was returned to jail for a further 16 years, but was granted parole in January 2021. Now 67, he revealed last week that he had spent more than 20 years of his life behind bars.
"When you come to think of it, I've spent a third of my life behind bars," he told the
Dressed in his trademark denim jacket, jeans and flat cap, Stone was practically identical to the blurred figure that made world headlines 34 years ago when he single-handedly launched a gun and grenade attack on an IRA funeral.
On March 16 1988, Milltown Cemetery on Belfast's Falls Road was packed as thousands of republicans attended the funeral of three IRA members executed by the SAS in Gibraltar 10 days before.
Mairead Farrell, Danny McCann and Sean Savage were shot by undercover soldiers who suspected they were about to detonate a bomb at an Army band parade.
But as the final coffin was lowered into the grave at the republican plot, the sombre silence was interrupted by the dull thud of an exploding grenade.
Armed with bombs and two handguns, Stone successfully infiltrated the mourners. And the explosion announced Stone's arrival as Northern Ireland's best-known terrorist.
Before long three people lay dead and another 60 were injured.
But Stone's plan to wipe out republican leaders Gerry Adams and Martin McGuinness - who were among the mourners - had failed miserably.
Pursued by young republicans, Stone soon ran out of grenades and ammunition. And his plan to escape via the M1 motorway hit a brick wall when his getaway driver left him to his fate and headed back to base on the Braniel estate.
Stone was beaten senseless. His two guns were spirited away from the scene. He was in the process of being taken away in a car when it was stopped by police. Badly injured, Stone was rushed to hospital.
The guns taken from Stone were prized possessions of the IRA, and used in several high-profile assassinations.