Documentary proof of a story so extraordinary that many MPs refused to believe it at the time has emerged with the release of the latest batch of Baroness Thatcher’s private papers.

A note made in the former Prime Minister’s handwriting, seemingly for her own eyes only, has confirmed that after the 1983 general election, she planned to anoint the court favourite, Cecil Parkinson, now Lord Parkinson, as her eventual successor by making him Foreign Secretary. The plan had to be aborted when Lord Parkinson became the centre of the most highly publicised political sex scandal of the Thatcher era.

The note, published today on the website of the Margaret Thatcher Foundation, from the collection at the Churchill Archive Centre in Cambridge, lists five of the main government departments – the Foreign Office, Home Office, and departments of Industry, Employment, and Environment, in order, and beside each the initials of the man she proposed to put in charge – respectively C P (Cecil Parkinson), G H (Sir Geoffrey Howe), N T (Norman Tebbit, now Lord Tebbit), P J or P W (Patrick Jenkin, now Lord Jenkin of Roding, or Peter Walker, later Lord Walker of Worcester) and L B (Leon Brittan, now Brittan of Spennithorne).

Chris Collins, from the Thatcher Foundation, said that “such speedy promotion to very high office would have carried the implication that she favoured Lord Parkinson as her successor, and might have met powerful opposition”.

She had to abandon this idea when Cecil Parkinson announced that he planned to divorce his wife, Ann, to marry his pregnant secretary, Sara Keays. In fact, he later decided to stay with his wife. In the light of this setback, Lady Thatcher merged the departments of trade and industry and put Lord Parkinson in charge of both, but he was forced to resign later in the years after Ms Keays went public about the scandal. The man who actually became Foreign Secretary, Sir Geoffrey, later played a major role in bringing down Lady Thatcher, while Lord Parkinson stayed loyal to her for life.

The journalist Hugo Young, who wrote the first authoritative biography of Lady Thatcher in 1989, checked the rumour that she had wanted to make Lord Parkinson Foreign Secretary. He wrote: “When this story was first put about, many Tories could not credit it, but subsequent inquiries among several sources confirm it as a fact.”

She had kept her intention secret from even her closest colleagues, though her Chief of Staff, David Wolfson – now Lord Wolfson of Sunningdale – had an inkling that Lord Parkinson was being lined up for something big. He thought that she intended to keep him on as Conservative Party chairman, the job he had done so successfully during the 1983 general election, and simultaneously give him a major cabinet post. He warned her that it was bad idea, and nominated Lord Parkinson for a lesser cabinet job.

“It has been ideal to have Cecil as a member of Cabinet without much workload,” he wrote in a memo included in the batch of papers released today. “This won’t matter much for the next few years, but will matter at the next election. As chairman and, say, Home Secretary, the Party would suffer in the run-up to an election. Cecil would also be in a position of immense power, and you must judge whether he has yet proved himself as a cabinet minister.”

Further down the same document, Lord Wolfson added: “Cecil might well be ideal at Industry. He is an accountant, and could cope with the problem of controlling nationalised industries.”

The documents also show that she was thinking about reshuffling her Cabinet in August 1982, when it was possible that she might delay the election until 1984. Her loyal Parliamentary Secretary Ian Gow compiled a note for her, which listed her friends and enemies in the Cabinet. He calculated that the arithmetic was 12-10 in her favour, with Michael Heseltine, now Lord Heseltine, and the only other woman in the Cabinet, Baroness Young, among her enemies.

Ian Gow put the lecherous backbench Tory MP Alan Clark at the top of a list of people she might like to bring into the government, adding: “I really think that we cannot allow this absurd girl to prevent his advancement.” He did not say who the “absurd girl” was, but years later in emerged that Alan Clark had a 14-year affair with a woman named Valerie Harkess. By 1982, he had also had a sexual liaison with one of her daughters, and added her second daughter to what he called his “coven”. This is the first hint that Lady Thatcher may have known something of the story before giving Mr Clark his first ministerial post.

‘Fantasy’ to believe leaving the Common Market would work

Pulling out of the EU would “ruin huge areas of industry and cause massive job losses”, one of Margaret Thatcher’s favourite unofficial advisers warned her 30 years ago – sentiments with which she obviously agreed at the time.

The journalist Woodrow Wyatt, a former Labour MP who had become one of Mrs Thatcher’s most ardent admirers, is now known through his diaries to have been in touch with her almost every week, offering free advice, which she clearly valued.

He sent her pages of suggestions for the 1983 general election. The section on what was then called the Common Market is annotated in Thatcher’s distinctive handwriting.

Lord Wyatt (pictured) was attacking the Labour Party for proposing to pull the UK out of the “Common Market”. He claimed: “Whether we are right or wrong to go into the Common Market, we are deeply in it now.

“To disentangle ourselves would be to ruin huge areas of industry and cause massive job losses.

“It is fantasy to believe that the Common Market countries would make special arrangements for British goods. They may make special arrangements for little countries like Sweden or Norway but we are among the giants of the industrial nations. If we leave the Common Market they have to put high duties on our goods or what is left of it would be wrecked.”

Plucky Harrow boys took PM to task

Two boys from Harrow public school showed a good deal of cheek when they were allowed into 10 Downing Street to meet Margaret Thatcher.

Cabinet Secretary Robin Butler, an old Harrovian, persuaded the Prime Minister to be interviewed by a pair of Harrow boys for the school magazine.

The two boys were allowed into Downing Street on 4 October 1983. One was historian Simon Sebag Montefiore, who was then 18 years old. They tested the Prime Minister’s patience by suggesting that she had been using the “antics” of the miner’s leader, Arthur Scargill, and the leader of the Greater London Council, Ken Livingstone, to “discredit the left”.

They also quizzed her about the tabloids during the Falklands War. “Were you annoyed at the jingoism of the tabloid press?” the boys asked. She demanded to know what they meant by ‘jingoism’. When they said it meant being ‘over-patriotic’, she retorted: “I don’t believe you can ever be over-patriotic.”

A lust that dared to speak its name

It is well known that some men in her circle fancied Margaret Thatcher. When John Nott resigned as Defence Secretary in January 1983, he sent her an extraordinary letter, the original of which has now been released.

“It is inexcusable to say so nowadays, but I actually admire you as a woman – your good looks, charm, and bearing have always attracted me, as a man,” he wrote. “I’m sorry, but what is wrong with that! I think your emotional, instinctive and unpragmatic approach to most issues – so very unmasculine – is the secret of your success.”

Mrs Thatcher had a practice of making marks or comments in the margin on every document that crossed her desk, but this one was filed in the archive in pristine condition. Either she did not read it or, more probably, she ignored it.