Arrogant Jon Venables is taunting prison staff - bragging that he is "untouchable".
James Bulger's killer - put back behind bars two weeks ago over child porn claims - shamelessly trades on the fact that his identity must be kept a strict secret.
Venables, 27, who spends his time on a PlayStation and munching up to 10 bags of Maltesers a day, told officers: "One hair on my head gets hurt and you're in the s***."
Only a handful of senior staff at the jail where he is held know his true identity. Officers have been warned they face the sack - or even jail terms - if they reveal his identity.
A Home Office source said: "Venables is lording it up in there and quite frankly it's sickening. He is not even paying for his own sweets - the prison picks up the tab.
Shower
"He eats Maltesers all day and has a PlayStation to himself to try to keep him happy.
"Everyone thought he would be terrified of people finding out who he is but it seems that couldn't be further from the truth.
"He's as cocky as they come and knows that if anything happens to him then heads will roll."
The People knows which prison Venables is in but cannot report it. Ministers insist that exposing him could lead to vigilante attacks and prejudice any criminal trial he may face.
The only time he leaves his cell is for a shower and an hour's exercise each day.
Venables and Jon Thompson, both then 10, were convicted of the horrific murder of two-year-old James in 1993.
They abducted the little lad from a shopping centre in Bootle, Merseyside, and his mutilated body was found on a railway line in nearby Walton.
The killers were given new identities at an estimated cost to the taxpayer of £1million when they were freed in 2001. A court order has always banned the media from identifying them or even reporting which area they live in.
Children's Commissioner Maggie Atkinson has now argued the killers were too young to be prosecuted.
But the Government has rejected her appeal for the age of criminal responsibility to be raised from 10 to 12.
James's mother Denise Fergus met Justice Secretary Jack Straw last week to ask for more information about the breach of licence conditions that led to Venables being recalled to prison.
Mr Straw would only confirm publicly that the killer was re-arrested over "very serious allegations".
But police are believed to have found Venables in possession of one of the worst categories of child porn.
His computer was seized and officers are said to have found indecent images on it. It is believed that Venables, who is said to deny any wrongdoing, could be charged in the next few weeks.
There have been demands for more details to be made public. Protesters say the allegations expose the folly of letting out the pair so soon.
James's father Ralph Bulger, 43, told The People last week: "I am sickened to the stomach to hear Venables is back in jail for an alleged sex offence. But I can't say that I'm surprised. This is why we never wanted either of these twisted and vicious killers to be released in the first place.
Venables has to have his secret identity and his freedom taken away. As a 27-year-old man he now has to pay in the adult world for what he has done to James."
A senior prison source said: "It is very difficult trying to look after Venables. We have seen nothing like this before.
"There is not one other prisoner in Britain who is as hated as this guy. Surely it's just a matter of time before someone realises who he is - but we are doing all we can to prevent that happening."
features@people.co.uk