A vast network of Nazi sympathisers apparently working to undermine Britain's war effort against Germany was secretly controlled by MI5, according to newly-released documents.
Files released by the National Archives show that the motley array of traitors and "fifth columnists" active in Britain during the Second World War was totally penetrated by the Security Service.
MI5 even drew up plans to issue them with special badges to be worn in the event of an invasion - supposedly to identify them as friends to the Germans, but in fact to enable them to be swiftly rounded up by the police.
The service also acquired replica Iron Crosses to reward members of the network for their loyalty while adding further proof that they were actually working for the Germans.
At the centre of the operation was a MI5 agent, known by the alias "Jack King", who was said to have a "genius" for such work.
By the end of the war, MI5 estimated that he was able to monitor and control the activities of hundreds of would-be traitors who were in fact acting as "unconscious agents" of the British.
King - who is also referred to as SR in the files - initially began by attempting to penetrate Siemens Schuckert (GB) Ltd, the British arm of the German industrial giant which was suspected of conducting espionage for the Nazis.
But the plan changed when in 1942, during the course of his inquiries, he met a "crafty and dangerous woman" called Marita Perigoe.
Said to be of mixed Swedish and German origin, she was married to a member of Oswald Mosley's British Union of Fascists (BUF) who had been interned in Brixton Prison. She, however, had no time for the BUF, regarding them as "insufficiently extreme".
"She was found to be so violently anti-British and so anxious to do anything in her power to help the enemy that it was felt that special attention should be paid to her," MI5 reported.
"Marita Perigoe is not a neurotic nor feminine type; she is a masterful and somewhat masculine woman. Both in appearance and mentality she can be described as an arrogant Hun," it said.
In order to penetrate her network of fifth columnists, King managed to convince her that he was a representative of the Gestapo looking for people "a hundred per cent loyal to the Fatherland" who could be relied on to help in the event of an invasion.
Initially he sought to exploit the group's taste for the cloak-and-dagger aspect of espionage work, offering to supply them with invisible ink for secret communications.
"The organisation has certain somewhat melodramatic ideas about secret service work and to gratify these a suitable meeting place in the basement of an antique shop has been found," MI5 reported in 1942.
"Arrangements have been made to record any conversations that take place there."
Although members of her network were often regarded as unstable - or in one case "semi-lunatic", MI5 was quick to stress that did not mean they were not dangerous.
Hilda Leech was described as "unstable and neurotic" and "violently anti-Semitic" however she was also passing on reports - she supposed to the Germans - about highly secret research to develop a jet aircraft.
Meanwhile Edgar Whitehead, an astrologer who was said to be "a bit of a mystery man" was passing on information about secret trials on a new amphibious tank.
As King's network expanded, MI5 was looking at new ways to subvert its activities.
"It is proposed at a later stage to provide all members of the organisation with badges, which will probably take the form of some innocuous object like the Union Jack, which they will be instructed to hide until orders are given from headquarters," one report stated. "From then onwards they will wear them. The object of this plan is to enable the police easily to identify members of this fifth column organisation in time of emergency."
By the end of the war, Perigoe was one of six agents working directly to King - all but one of them British. MI5 estimated the numbers of their contacts who had been the subject of his "SR" intelligence reports ran "certainly to scores and probably to hundreds".
The scale of the treachery they found shocked the security service.
"When, about two years ago, the SR case began to extend from its earlier limited sphere into wider Fascist-minded groups, the spectacular nature of some of the reports and the vivid light which they threw on the disloyal outlook of so many British subjects naturally created doubts in some quarters as to the validity of the information or at least some of it," it reported.
"But it gradually became apparent that the bulk of the SR material could be relied on as substantially accurate."