Speaking on Celebrity Big Brother, he was responding to questions about whether his late Boyzone bandmate had always been openly gay.
He said he had not, and Stephen, who died in 2009, only spoke about his sexuality in the 1990s because he was left with no choice.
“Obviously, me and the boys always knew Steo was gay. It wasn’t a question because his boyfriends used to come on the road with us,” he said.
“I think in the early 1990s when we came to the UK, being in a boyband and being gay, nobody had come out, it was just not the thing to do.
“It would have been management and stuff, it was all swept under the carpet.
“There’s an understanding among celebrities, or whatever you want to call it, but he was meant to be dating Baby Spice and all that.”
Shane said Stephen was then put under pressure to reveal his true sexuality.
“What happened was, we were on tour and he got a phone call to say that the press was going to run with a story on him,” he said.
“He was distraught. They said to him, ‘Look, you can tell your story, or we’re going to print our story’.
“It nearly destroyed him. It really nearly destroyed him.”
He said that when Stephen did come out, becoming the first boyband member to do so, he felt a huge sense of relief and received a hugely positive response.
“He couldn’t believe it himself, the weight off his shoulders, the lie had left. It was gone,” said Shane.
“The support he got from our fans – they were the best. From that point, he just flourished. He had always been that reserved.
“He grew into this beaming man of joy. The release. He turned into just the most joyful person.”
Stephen died, aged 33, of a congenital heart defect at his apartment in Andratx, Majorca, in October 2009.