Demands for a public inquiry into the so-called "Stormontgate affair" have been rejected by NI Secretary Peter Hain.
He was speaking ahead of a meeting with Sinn Fein President Gerry Adams.
Mr Adams said he had asked for the meeting following his party's expulsion of Denis Donaldson on Friday after he admitted being a British agent.
Mr Hain said: "Frankly, we have had inquiries galore in NI. They cost hundreds of millions of pounds."
Northern Ireland's power-sharing executive collapsed in October 2002 following the arrests of three men, including Mr Donaldson, who had headed the party's administration office at Stormont.
SEQUENCE OF EVENTS
4 October 2002: Three men arrested following raid on Sinn Fein's Stormont office. Power-sharing executive collapses and government restores direct rule to NI a week later
8 December 2005: Charges against three men dropped "in the public interest"
16 December 2005: Sinn Fein says Denis Donaldson was a "British agent" and expels him from the party: he later says he worked as a spy since the 1980s
Government and police reject the party's claim raid was politically motivated
Charges against the three were dropped after the prosecution offered no evidence "in the public interest".
On Monday, Mr Hain told BBC News: "If it was not possible to proceed with this trial because, as the Director of Public Prosecutions decided, it was not in the public interest to do so, what purpose would an inquiry serve?
"I am not going down that road when it is quite clear that it is not in the public interest to do so."
He added: "I am very clear that no security service elements, or security force elements, misled myself or the secretary of states prior to me over the last few years that this has been in play.
"If there were some giant political conspiracy, how would it have been that this political conspiracy would have robbed this office of its own information, of the most sensitive kind - this just beggars belief, it would be a complete fantasy."
Speaking after the meeting with Peter Hain, Sinn Fein chief negotiator Martin McGuinness said his party had "answered all the big questions and all the big difficulties" about the republican approach to the political process.
"It is now time for the British to answer questions about their agents, about their agencies, and about their approach to the process," he said.
"In fact, what we are calling on them to do is declare that their war against republicans and the peace process is finally over."
Government sources say Mr Hain does not accept SF's analysis
In the Commons, DUP leader Ian Paisley accused Prime Minister Tony Blair of "skimming over" the "tragic situation that is developing in Northern Ireland".
"Mr Blair reiterated that the decision to drop IRA spying charges against three men was made solely by the director of public prosecutions, but he said he was looking at the possibility of revealing more details," Mr Paisley said.
"I think personally that it would be helpful if we were able to give more information, but it can only be done if the consent of the proper authorities is given."
Meanwhile, SDLP leader Mark Durkan said "the dirty war had given way to a dirty peace".
He said it was clear to him that Sinn Fein and the British government were "working to cover up the truth about the underbelly of the peace process".
On Sunday, Mr Hain said both Sinn Fein and the DUP were wrong to suggest the government was involved in a cover-up.
However, Mr Adams said his party "were not alone in identifying elements within the British system involved in a campaign to undermine the peace process".
Mr Donaldson said he had been recruited in the 1980s as a paid agent and deeply regretted his activities.
Unionists have said Mr Donaldson's statement proved the charges against all three were dropped "in a deal with the IRA" to secure decommissioning.
However, both the Northern Ireland Office and the Police Service of Northern Ireland have denied this.