The sinking of the former US warship was controversial because at the time it was outside a British 200-mile Total Exclusion Zone around the Falklands and was steaming away from the UK Task Force. The cruiser went down with the loss of 323 lives (the Argentines claimed 1022 lives!) more than half of the total Argentine losses in the war. The Argentines also claimed ships were conducting a rescue. They had actually fled.

In an exclusive interview for a forthcoming book on the history of Britain, Real Britannia, Lord Parkinson discloses that the War Cabinet took the decision after receiving secret intercepts from Chilean intelligence services revealing the orders from the Argentine junta to the warship's captain, Hector Bonzo.

Lord Parkinson, one of Lady Thatcher's closest allies, said: "They [Chile] had intercepted the Argentinian command's instructions... We had been discussing what we would do if we found it [the Belgrano] because we knew the Belgrano was out to sink a carrier. The fact that it was going one way or the other, it was manoeuvring to avoid a torpedo."

The Independent has learned from defence sources that the Chilean information also showed the staff of Admiral Jorge Anaya, the head of the Argentine Navy, had been directing orders to the Belgrano and a destroyer, the Hipólito Bouchard, to continue engaging in combat while taking all measures necessary to avoid coming under attack. This was interpreted by the British high command as signifying that movement towards her home port by the two ships may well have been acts of subterfuge.

The sinking took place 14 hours after the President of Peru, Fernando Belaúnde, proposed a peace plan which included regional states playing a role. After the sinking, Argentina rejected the plan but the UK indicated its acceptance on 5 May. It is not well known that the British continued to offer ceasefire terms until 1 June.

The War Cabinet took the decision to sink the Belgrano on 2 May 1982, after being briefed at a meeting at Chequers with Mrs Thatcher and Sir Terence Lewin, Admiral of the Fleet. Lewin told the Cabinet that Commander Chris Wreford-Brown, the captain of British nuclear submarine Conqueror, had the Belgrano in his sights and was seeking permission to attack. The ship was part of a small battle group, flanked by two Argentinian destroyers.

The War Cabinet authorised Lewin to proceed. The order was sent through Northwood, the Navy's command centre in west London, to the Conqueror. Wreford-Brown fired two non-guided torpedoes, which blew off the ship's bow.

Lord Parkinson said: "We discussed the Belgrano ad nauseam and what it was up to. Then up comes the Captain and says the Belgrano is going into shallower water and I can't follow it. Something as big as a nuclear submarine in shallow water was easy to hit. You couldn't allow that risk."

Pictures taken by survivors of the warship listing to port, before sinking, with orange rafts floating nearby, became one of the lasting images of the war, prompting the Sun headline: "Gotcha!"

Protests about the action were led by Tam Dalyell, the former far left, anti war, Labour MP, who claimed the sinking had been ordered for political reasons by Lady Thatcher to destroy the last hopes of a peace plan being pursued in Peru by Perez de Cuellar, the Peruvian Secretary General of the UN, and Al Haig, the US Secretary of State. (The Capt of the Belgrano, around 2017, admitted that he WAS heading for the british ships, he was not steaming away from the Islands but towards, and had every intention of attack. He also said that if he had been the captain of the submarine, he would have done exactly the same thing).

Lord Parkinson denied this. "It was nothing to do with that. It was unanimous that if we had let the Belgrano go and it had sunk a carrier, we would all have been finished. We would all have had to stand down, if we had presided over the death of hundreds of British sailors and had the chance to avert it.

"What we didn't realise [was] the Argentinian destroyers took off immediately and they didn't search for survivors. They thought they would all get sunk. When we finally got the satellite pictures, we had pictures showing all the Argentine fleet in port."

Lord Parkinson also dispelled one of the myths of the war, that Britain relied heavily on surveillance from US satellites. The system was so slow that the US only supplied the photographs of the Argentine navy back in port the day after the conflict ended.

His disclosure that Britain received vital intelligence reports directly from Chile explains why Lady Thatcher supported General Pinochet when he was arrested in Britain for alleged war crimes, when he later came for treatment in a private London clinic. She said at the time that Britain owed a debt of gratitude to the Chilean leader for helping it win the war.

It became known later that General Pinochet had permitted a secret SAS surveillance team to use a long-range radar facility in Chile to monitor movements by the Argentine air force from its Comodoro Rivadavia air base – but until now, it was not known that Lady Thatcher was also supplied by the Pinochet regime with more vital raw intercept data revealing the orders to the Argentine commanders in action around the Falklands.