DUBLIN, Ireland (AP) _ Britain's first attempt to extradite a guerrilla suspect under a new agreement with the Irish Republic collapsed on Monday when an Irish court freed a man accused of bombings in London.

Prime Minister Margaret Thatcher of Britain was ''utterly dismayed'' by the ruling, a senior aide said.

A crowd of supporters cheered Patrick McVeigh, 37, outside Portlaoise district court and drove him away so quickly they left his wife, Celina, standing on the sidewalk.

McVeigh was the first person targeted for extradition since the British and Irish governments last month resolved legal differences which had stopped all extraditions this year.

An Irish state application was made for McVeigh to be sent to Britain to face charges regarding explosions between 1981 and 1983 that killed two people outside Chelsea Barracks and a bomb disposal expert in Oxford Street.

Judge Jarlath Ruane said the Irish government had not properly established McVeigh's identity.

The judge said British police had not sent witnesses to identify McVeigh as the man wanted, so there was nothing to indicate the man in court was the same as the one mentioned on extradition warrants.

McVeigh, from Belfast, was arrested May 18 as he left Portlaoise prison after serving five years of a seven-year term for Irish Republican Army weapons offenses.

Alan Green, Britain's director of public prosecutions, said in London that Irish authorities had assured his officers further identification was not needed.

An Irish government spokesman said: ''We do not comment on decisions made in court.''

Sean McManus, national chairman of the Sinn Fein, the legal political wing of the outlawed IRA, accused the British government of arrogance in assuming Irish courts automatically would hand over prisoners.

''There should be no extradition of Irish citizens to face British injustice,'' McManus said in Dublin.

Under a new law that took effect last Dec. 1, Britain and Ireland agreed to make positive identification the chief factor in extradition.

Previously, Irish courts freed wanted guerrillas on grounds the IRA was engaged in a political struggle and not a criminal one in trying to drive the British out of Northern Ireland.

The extradition issue has been a major British-Irish dispute.

In 1986, bombing suspect Evelyn Glenholmes was freed when a Dublin court found a London police warrant for her defective. She has been on the run from valid warrants ever since.

London-Dublin relations are still troubled by the fatal shootings on March 6 of three guerrilla suspects in Gibraltar colony and refusal to grant a new trial for six Irish people imprisoned in Britain for bombings of which they say they are innocent.