Northern Ireland Secretary Peter Hain last night said a prosecution would follow after a report uncovered widespread collusion of Special Branch officers with a loyalist paramilitary death squad responsible for up to 15 murders in the province.

Members of an Ulster Volunteer Force gang were protected for years, with their handlers destroying evidence and thwarting police investigations.

Mr Hain told Channel 4 news that "there would be at least one prosecution" in the wake of the devastating report by Police Ombudsman Nuala O'Loan.

However, he rejected calls from the family of Raymond McCord Jnr - whose 1997 murder in Belfast sparked the ombudsman's investigation - for an independent judicial inquiry.

Mr Hain said: "There is nothing at all to suggest that such an inquiry will uncover any new or additional evidence that has not already been unearthed by the Police Ombudsman during the painstaking investigation."

Relatives of victims horrified by the scale of the cover-up and protection of terrorist killers are considering possible legal action against Sir Ronnie Flanagan, former RUC chief constable. Calls were made for his resignation as the head of Her Majesty's Inspectorate of Constabulary.

In presenting her report, Ms O'Loan revealed the level of resistance her three-year £2m inquiry faced. Officers who were questioned were accused of providing evasive, contradictory, farcical and untrue answers and delaying requests for information for up to two and a half years.

Three retired assistant chief constables - two ranks below that of chief constable - seven detective chief superintendents and two detective superintendents were among 40 officers who refused to be interviewed. At least two of those implicated are still serving in the reformed Police Service of Northern Ireland (PSNI), Sir Hugh Orde, current chief constable, disclosed.

Ms O'Loan made clear the scale of the collusion meant it was not only junior officers who were involved.

While none of the paramilitaries or police officers were identified in her report, the prime agent, called Informant No 1, is known to be Mark Haddock.

The 37-year-old ex-terror chief was paid at least £80,000 by his Special Branch handlers between 1991-2003. Haddock is serving a 10-year jail term for a horrific attack on a bouncer.

A source close to the inquiry said: "If you've got intelligence an informant you are handling has murdered and you do nothing and it happens again and again and again, you've got a serial killer on your books who you are paying a salary, immunising and protecting from prosecution."