Capt James Kelly, who died yesterday, had "honourably served his country" and believed he had obeyed proper orders from superiors in the events that led up to the Arms Trial, the Taoiseach, Mr Ahern said last night.
Capt Kelly died yesterday afternoon at the palliative unit of Harold's Cross Hospice in Dublin, surrounded by his family. He was 73.
Offering his sympathies to the Kelly family, Mr Ahern said: "As a member of the Defence Forces, he was a dedicated officer who honourably served the interests of his country."
The Taoiseach said Capt Kelly had been "prosecuted in the Arms Trial in circumstances of great controversy". He was acquitted of all the charges laid against him. "As far as the State is concerned, he was innocent of those charges."
The Taoiseach's statement appeared to deflect earlier demands from the Kelly family and others for a full apology. Last night, the Kelly family welcomed the Taoiseach's statement as an endorsement of his honour and integrity.
Their solicitor, Ms Margaret Carey, said it was "a great solace" to them. "James would have been delighted with the Taoiseach's statement, especially his personal endorsement of Captain Kelly's character and integrity. It is the fitting vindication of a 33-year quest to clear his name."
In his statement, Mr Ahern said: "It is my belief that at all times during those difficult days in the early period of the troubles, Captain Kelly acted on what he believed were the proper orders of his superiors.
"Historians will make their own judgments about the events of that era. For my part, I have never found any reason to doubt his integrity," Mr Ahern said.
Offering his condolences, the Fine Gael leader, Mr Enda Kenny, said Capt Kelly had served his country well as a member of the Defence Forces. "His involvement in the Arms Trial highlighted the profound responsibility and pressures that could be involved in discharging one's duties on behalf of the State.
"He recently succeeded in having his good name cleared in court in respect of his actions during the arms crisis and it is regrettable he failed to receive a similar response from the Irish Government before his death."
Labour TD Mr Joe Costello said it was time for the State to offer "a posthumous apology" to Capt Kelly, who had "suffered more than 30 years of innuendo and unproven allegation".
The Green Party leader, Mr Trevor Sargent, said his death was "a double tragedy" since it represented "a missed opportunity" by the State. "He has always claimed that he had government authorisation for the actions that he took. The Government has been found again to have dragged its feet on an issue that was unforgivable to delay."
Sinn Féin Cavan-Monaghan TD, Mr Caoimhghín Ó Caoláin, said he had admired Capt Kelly's "tenacity and his integrity in his long campaign for truth and justice".
"James Kelly was one of those scapegoated in the early 1970s by powerful sections of the establishment in this State who refused to face up to their responsibilities and who abandoned the nationalists in the six counties to their fate."
One of his Arms Trial co-accused, Belfast man Mr John Kelly, said he had been the victim of the "most outrageous injustice" perpetrated in the history of the State. "I am sad for Jim and the family, but I am also angered at the same time that he had to struggle for 30 years to get vindication."
Mr Kelly was acquitted with Capt Kelly, Mr Charles Haughey and Belgian arms dealer Mr Albert Luykx of charges that they attempted to illegally import arms.
"Jim was sacrificed for political reasons," Mr Kelly added. "They consistently refused to acknowledge that they did an injustice. It was ironic that a jury of his peers acquitted him but the Government refused to accept the verdict."