There looks to be nothing extraordinary in two groups of young footballers training on the gleaming artificial pitch at Crusaders' Seaview stadium, on a freezing night in north Belfast. Yet in view of Seaview's tired stands and ageing terraces, the session represents the green shoots of remarkable change: the Under-13s of Crusaders, once a Protestant, loyalist stronghold, are sharing their pitch with the Under-16s of Newington, a Catholic club.

Crusaders – lying second in the Irish Premiership, behind Protestant Linfield – have entered a close, formal partnership with Newington, which they hope will lead to a landmark shared stadium in a still highly segregated neighbourhood. Crusaders do not try to deny the brutal recent past, explicitly acknowledging two grim records which mark the Seaview ground. In 1979, to guard against trouble when Crusaders played Cliftonville, there were more police officers on duty – 1,900 – than had ever been recorded at a UK football match. Then on 12 January 1980 the Royal Ulster Constabulary constable David Purse was shot on duty, the only murder at a football ground during the Troubles.

"This club was a very unwelcoming place during the Troubles," Mark Langhammer, a Crusaders board member, says. "If a Roman Catholic had walked into our bar just 10 years ago he would have been shot dead.

"North Belfast is still very divided but through the two clubs' alliance we have held mutual respect sessions for the youth players, anti-racism and suicide awareness. This area, because of the sectarian troubles, has Europe's highest rate of suicide for young men. We are looking to build a partnership, bringing people together through football."

The Crusaders and Newington initiative is at the visionary end of wider efforts by the Irish Football Association to steer the game out of the sectarian divide, with which the IFA, predominantly Protestant, has long been associated. The governing body began its Football for All programme 10 years ago, after Neil Lennon was relentlessly booed by a loyalist section of Northern Ireland fans in a 4-0 defeat by Norway. The date, 27 February 2001, is etched into the memory of Michael Boyd, the IFA's head of community relations, then fresh out of Ulster University and new in his post.

"That was a catalyst to tackle sectarianism," Boyd says. "It was a big moment, when many people involved in football decided they wanted better for the game."

The IFA began to pursue a culture change, despite being widely mistrusted then by many Catholic football followers, who still resent the IFA's staggering 100-year agreement, signed in 1985, to play home internationals at Linfield's Windsor Park, which gives the club a major financial advantage over other clubs.

The IFA has worked intensively, with the Amalgamation of Official Northern Ireland Supporters Clubs, to counter sectarian chanting and flags at international matches, a campaign hailed in a 2005 evaluation by the Belfast-based Institute for Conflict Research as "remarkably effective in transforming the atmosphere at international games".

With funding from the EU's Programme for Peace & Reconciliation in Northern Ireland and from Uefa the IFA has extended this community relations effort into clubs which for decades were strongholds of segregation. The IFA conducts "community audits", advising clubs, many of which are in financial difficulties with dwindling crowds, on widening their appeal and accessing public grants for partnership initiatives.

At the cutting edge of this community relations work has been the disinterment of the extraordinary story of Belfast Celtic, the predominantly Catholic club and former great rivals to Linfield. Celtic folded in 1949 after a sectarian riot at Windsor Park in which a section of Linfield fans invaded the pitch and attacked Celtic's players. Jimmy Jones, a goalscoring inside-forward who was attracting interest from English clubs including Matt Busby's Manchester United, was chased, thrown to the ground and violently assaulted, breaking a leg.

Padraig Coyle, a Belfast writer and broadcaster, records in his excellent history of Celtic, Paradise Lost and Found, how the club complained that the police stood by, arresting nobody, and the IFA was wholly inadequate in its response. The Celtic directors, without ceremony or much public statement, gradually sold all the players, then withdrew from football forever.

The Belfast Celtic Society has established a museum, to keep the club's memory alive, at the Park Centre, a shopping mall built on the site of Celtic Park after it was demolished in 1985. There Jimmy Overend, a Celtic fan back then and now 86, says he can "still smell the match whenever I come here, the tobacco and oranges".

Of the demise of the club, which had lit up the lives of politically oppressed, impoverished Catholics such as himself, a general labourer, Overend laments: "It was like a black cloud coming down, as if there was nothing to live for or look forward to on a Saturday. It's a grief which never went away."

Northern Irish football, some argue, never recovered. Crusaders took Celtic's place in the league but many fans used to leave Belfast on weekend cattle ships to watch Glasgow Celtic or Rangers, voyages which saw hand-to-hand fighting in the years of the Troubles.

Coyle wrote a play about Belfast Celtic, Lish and Gerry, which was performed to acclaim at Windsor Park last year, supported by the IFA and Linfield.

Coyle says he found the history unexpectedly subtle; the Lish character is Elisha Scott, a Celtic goalkeeper who moved to Liverpool where he became a legend, then returned and was Celtic's driven manager when the club folded. He was Protestant, while the Gerry character, Gerry Morgan, Linfield's trainer, was Catholic. The two embody the more mixed Belfast community which existed before the Troubles began in the late 1960s, and Coyle says Celtic's directors were themselves not beyond reproach.

"The violence against the Celtic players was appalling," Coyle says, "but it was reprehensible that the club folded with no real explanation given to supporters, who were left with a void."

Last week the IFA supported a performance of the play in the Northern Ireland Assembly at Stormont, in front of an audience of politicians whose parties still largely divide along sectarian lines. A community organisation, Healing Through Remembering, helped facilitate discussions afterwards about the issues and emotions provoked.

Chris Lyttle, of the cross-community Alliance party, one of three assembly members supporting the Stormont performance, described the event as "remarkably powerful" for excavating a buried story from Belfast's past. Lyttle believes such remembrance of Northern Ireland's troubled, but also nuanced, history should be much more widespread in the province.

"Although a line has been drawn under the violence here, there is a culture of not talking about the past, not having a truth recovery process as they did in South Africa," he says, speaking in his east Belfast constituency office. "That means stories are told in black and white in separate communities, tensions can remain in place and we are managing differences rather than bringing communities together. With this the IFA is giving a lead which many politicians struggle to provide themselves, to say we can understand the past and move towards a shared, more constructive society."

Boyd says opening the Belfast Celtic sore is "probably the riskiest thing we have done", adding: "It is like the old adage: if you do not understand your history, you could be condemned to relive it. Part of the Belfast Celtic tragedy is that we at the IFA let the club and its supporters down. We want people to understand that we have changed, we do not intend to let any section of the community down again. We are determined that in this small part of the world, football should bring people together and be a force for good."

david.conn@theguardian.com