Donal Donnelly - who dubbed the prison "Europe's Alcatraz" - broke out of the jail on Boxing Day in 1960 while serving a 10-year sentence for membership of the republican group during its 1950s border campaign.
The information is contained in papers released under a phased shift from 30 years, to a '20-year-rule' introduced recently by the Assembly.
Some of the papers have been redacted on the grounds of sensitivity and over the next 10 years information will be released twice a year.
The official files released by the Public Records Office of Northern Ireland (PRONI) revealed Donnelly petitioned the British government three times for the remainder of his sentence to be remitted.
Former Northern Ireland secretary Lord Hurd, part of a Conservative government scarred by republican violence, agreed to use the Royal Prerogative of Mercy in May 1985.
His decision was made less than two years after the biggest prison break-out in UK history by 38 republicans and ahead of landmark political talks on British co-operation with the Irish Government.
A Northern Ireland Office (NIO) letter from the time said: "The Secretary of State has approved the recommendation ... that the remainder of Mr Donnelly's sentence should be remitted."
Donnelly wrote the book 'Escape From Crumlin Road, Europe's Alcatraz' detailing his escape and how he used hacksaw blades, torn sheets and electric flex as makeshift tools.
Afterwards, he lived openly in the Republic of Ireland.
The use of pardons following the 1998 Good Friday peace agreement was disclosed earlier this year after the dramatic collapse of the trial of a man accused of the Hyde Park bombing.
Records released on Friday shed light on the thinking of senior civil servants considering the controversial practice much earlier, while the conflict was still fierce and when Lady Thatcher's government was adamantly opposed to granting any concessions to republicans.
The month Lord Hurd approved the pardon he was tasked with overseeing talks with the Irish Government on the Northern Ireland issue which led to the Anglo-Irish Agreement.
Less than a year earlier, in October 1984, the IRA targeted a Conservative Party conference in Brighton in a bombing which nearly wiped out the cabinet.
An NIO official suggested: "I cannot help feeling that given the Northern Ireland situation, the time will never be exactly right.
"However, the prisons are quiescent at the moment, the Maze escape is 18 months behind us and the trial of the recaptured escapers is some months ahead.
"If we hold off until the late summer we may well end up deferring action yet again rather than remit Donnelly's sentences during, or immediately after, that trial."
The use of the Royal Prerogative of Mercy has changed significantly since 1985. The introduction of the Criminal Cases Review Commission, statutory provisions on sentence remission for assisting offenders, and other routes for cases to be reviewed by the courts, mean that use of the RPM is now far more rare. It has not been used in Northern Ireland since 2002."
An extradition agreement between Britain and the Republic of Ireland was introduced in 1987 and the first extradition happened some years later.
The senior NIO official said: "Generally there is agreement that the remainder of Donnelly's sentence should be remitted.
"I would therefore propose that we should do so now in the wake of the local government elections while the prisons are generally quiet and before 25 June when the trial of the recaptured Maze escapers will focus attention back into this area."
He was referring to a break out by a group of IRA men, including senior Sinn Féin MLA Gerry Kelly, from the high-security Maze prison.
One prison officer was killed and another seriously injured. Six other warders suffered gunshot wounds or stabbings.
The trial concerned a claim for compensation by three recaptured escapers for alleged ill-treatment on their return to prison.
The court prosecution of all recaptured men for murder of a prison officer and attempted murder was expected to take place that autumn.
Lady Thatcher had become famous for her unbending handling of the IRA's prison hunger strike of 1981 in which 10 men died including Sinn Fein MP Bobby Sands.
But her signing of the 1985 Anglo-Irish Agreement strengthened ties with Ireland and paved the way for the 1998 peace agreement which ended violence and allowed for the release of conflict prisoners.
Current Northern Ireland Secretary Theresa Villiers has revealed that the royal prerogative was exercised in Northern Ireland on at least 365 occasions between 1979 and 2002.
But the true total may well be higher as the NIO has been unable to find the records for the 10-year period from 1987 to 1997.
Mr Donnelly, now 75, said he applied for a pardon because he was a planning and procurement manager with a multinational firm in the Republic of Ireland and wanted to work for the company in Northern Ireland and Great Britain.
"They knew that I was not involved with the Provisional or the Official IRA; effectively I was no threat to them," he said.
He added that the British Government may have been willing to make concessions or display intransigence about relatively minor things depending on its relationship with its Irish counterparts.
1985 Government papers timeline:
- Letters from American business representatives argued for a ban on provocative religious and political emblems in the workplace over concerns about anti-Catholic discrimination.
- The head of the civil service, Sir Ken Bloomfield, describes Peter Robinson as a "crafty politician" after impressing during a multi-party conference in American. The usually impressive John Hume, however, gave the impression he was "politically bankrupt".
- John Hume walked out of a meeting with the Provisional IRA after the paramilitaries insisted the meeting be recorded.
- The month witnessed a dramatic rise in violence. Throughout the year, 55 people were killed including 26 civilians and 29 security force personnel.
- Taoiseach Garret FitzGerald issued concerns over the killing of three IRA men in Strabane over fears that Dublin may be blamed for such incidents if it took a role in security matters.
- Over growing tensions surrounding contentious marches, Chief Constable Sir Jack Hermon, in conversation with a senior NIO official, said the Orange Order's insistence in marching through nationalist areas was "unreasonableness and injustice".
- Soon-to-be Ireland's richest man, Sean Quinn, claimed there was "significant political and sectarian discrimination" to the launch of his cement industry from the government-sponsored business-promotion organisation, the Industrial Development Board.
- The British government hands IRA escapee Donal Donnelly a royal pardon during ongoing talks with republicans and nationalists over a peace agreement.
- Sinn Féin gain ground at the expense of SDLP in council elections winning 11.8% while their rival's share dropped to 17.8%.
- A confidential police report found Chief Superintendent Jimmy Crutchley gave the order to fire a plastic bullet during disorder following the death of hunger striker Joe McDonnell at the Falls Road, Belfast, which resulted in the death of 31-year-old innocent civilian Norah McCabe.
- The re-routing of an Orange Order Twelfth parade through Obins Street in Portadown, Co Armagh sparks loyalist anger.
- Prisoners at the Maze had their Irish Language Bibles confiscated on security grounds.
- A prison officer is dismissed from his job at the Maze after his role in a mass break-out is uncovered by "good RUC detective work".
- Head of the Civil Service, Sir Ken Bloomfield, voiced his opposition to the terms of the Anglo-Irish Agreement before it was signed. He labelled it one-sided, fundamentally flawed and said it could destabilise the situation in the region.
- The Irish government writes to London officials requesting the UDR be withdrawn from south Armagh with either the RUC or regular army replacing them. The Irish government thought the move would be "helpful" in finding a peace agreement.
- NIO officials urge the Secretary of State to be aware of the importance of promoting the upcoming Anglo-Irish Agreement to officials in Dublin and northern nationalists while "dampening" unionist reaction to reduce security and public order concerns.
- NIO chiefs issued concerns about Margaret Thatcher's commitment to the Anglo-Irish Agreement. They said it was keen for her to be behind the deal to stop loyalist extremists "whipping up tensions".
- Margaret Thatcher and Taoiseach Garret FitzGerald sign Anglo-Irish Agreement.
- Irish Army Chief of Staff General O'Sullivan tells NIO officials his troops would not have hesitated to fire on 11 IRA prisoners attempting to escape Portlaoise jail.
- The first meeting of the new Intergovernmental Conference, establish by the Anglo-Irish Agreement, was met with wide-scale loyalist protest. Secretary of State Tom King said he felt Irish officials were "pedantic" about ensuring their share of the agreement was upheld without recognising the concern among unionists that the agreement held nothing for them.