Williamson has applied for amnesty for the letter bomb murder of Jeanette Schoon and her six-year-old daughter Katryn in Angola in 1984.
Testifying before the Truth and Reconciliation Commission's amnesty committee in Pretoria, Williamson denied the claim by the Schoon's lawyer, George Bizos SC, that the motive for the attack was to "settle old scores".
Bizos suggested that Williamson planned the bomb attack because the Schoons had been suspicious of him and had instituted an investigation against him which led to his unmasking as a police spy.
"This is news to me," Williamson replied, saying that nobody had previously accused him of acting out of revenge in bombing the Schoons.
Williamson said he was exposed in 1980 when former National Intelligence Services agent Arthur McGivern defected to the African National Congress, and took with him a large number of government files which he knew would reveal his true occupation.
He said his exposure had nothing to do with the efforts of the Schoons, who were living in Botswana at the time.
He claims the bomb attack attack on the Schoons was planned by his security police unit after intelligence was received that they were teaching English to Cuban soldiers in Angola. He said this might have had implications for Cuban air defences against SA Air Force raids.
Williamson also denied that he said "it serves them right" when he heard that the Schoon's daughter was killed in the blast.
According to the amnesty application of former security policeman Gerrie Raven, who has admitted making the letter bomb, Williamson said the Schoons had used their daughter as a bomb disposal system by allowing her to play with parcels that were delivered before they were opened.
Williamson denied this remark, but said it was possible that other policemen could have said something to that effect at the time.
"But you congratulated Raven after receiving news of the blast," Bizos said to Williamson, who claimed he had done so because the device had exploded successfully.
"But the device killed a child. Any person with a drop of humanity would have said `woe to us, we have killed a child', or anybody with any human decency," Bizos said.
Williamson replied that it had never been his intention to target a child and he still thought of the death of Katryn Schoon every day of his life.
Williamson, who studied at the University of the Witwatersrand with the Schoons, said he had been their friend, but their involvement in the ANC made them his enemies.
Bizos told Williamson that Schoon, who has attended all the hearings, never considered the former spy a friend.
"Does that make you feel happier," Bizos asked of the former spy, who replied that it did not.
Bizos also accused Williamson of targeting women in his attempts to demoralise the ANC. Williamson replied that he had been involved in operations in which "more than just women" had been killed.
Earlier in the hearing it emerged that Robert McBride conducted an interview with Williamson about the death of anti-apartheid activist Ruth First, who was killed in a letter bomb attack in Maputo in 1982 - another crime for which Williamson is applying for amnesty.
A transcript of the interview was on Friday presented to the amnesty hearing.
There was no indication as to when and where the interview was conducted and in what capacity McBride was talking to the former spy.
McBride is a former ANC soldier who spent six years on death row for killing three people when he bombed a bar in Durban.
Williamson's lawyer, Allan Levine, claimed the interview was surreptitiously recorded and passed on to First's daughter, Gillian Slovo.
Bizos said Slovo obtained the tape from McBride in an effort to get information about Williamson's role in her mother's death. Bizos said the tape was then mistakenly mixed up with tapes of an interview Slovo herself later conducted with Williamson.
Bizos said during transcription of the tapes, Slovo's name was mistakenly attributed to the questions asked by McBride.
Levine told the committee the interview was recordeded without Williamson's permission. He claimed the inclusion of the McBride tape in Slovo's interview was irregular and called for an investigation.
The presence of the McBride interview led to acrimonious exchanges between the legal representatives and at one stage Levine requested that Bizos' cross examination be stopped pending the outcome of the investigation into the origin of the tape.
Committee chairman Judge Andrew Wilson ruled that Levine should clarify the matter with Bizos as to how the mistake had come about and that the cross-examination should continue.
In the McBride interview, Williamson reveals his involvement in the murder of First and how the letter bomb was prepared and delivered to Mozambique.
The hearing continues on Monday.