Swinging Arm play

Is it definitely swinging are play and not isolastics? Can sometimes be trick to be sure.
I replaced my bearings as soon as I detected any movement, but this was done by feeling right by the pivot, so it could have been a fair bit by the back of the back wheel.

Have you lubricated the pivot recently? Castrol EP140 as recommended, it takes up small amounts of play while impregnating the Oilite bushes, even if the oil leaks out through worn seals as on my Mk3.
Actually a very effective setup, especially if you fit remote oiling points above each end

Lubricant won't take up play in the bush, it will make the bush oily and leak out as the seals are knackered by now.  If you can see movement tween the swing arm and cradle its replacement time. Is the cradle still using the single 1/4" bolt to locate the spindle? If so it could be the spindle worn into the cradle. This would be an MOT failure if it is reinstated, as it should be in my opinion. 

Worth a try before you strip it all down Richard. Not sure if it will cure 1/8" mine is less than that, mainly worn seals but you may notice a difference.
Once the oil impregnates the bushes and the excess has drained off, there's no play and good for at least a thousand miles on my bike. I just treat it as a regular lube job.

"it will make the bush oily" well spotted that lad...