Newly discovered personal letters written by Lord Alfred Douglas, better known to many as Oscar Wilde's lover "Bosie", are causing a stir among scholars and shedding new light on an establishment cover-up.

The letters reveal the passionate relationship between Bosie and Maurice Schwabe, a fellow member of Wilde's circle: "I send you all my love and millions of kisses all over your beautiful body." They lay undisturbed for decades in the archives of the State Library of New South Wales in Sydney and were put on public display for the first time earlier this month, to coincide with the 2011 Sydney Gay and Lesbian Mardi Gras.

They were written in 1893, even as Wilde was being blackmailed by a young man named Alfred Wood. In Victorian England, despite homosexuality being illegal, there existed a thriving subculture of brothels and rent boys. Wood, whose services were used by Wilde and Bosie, stole love letters written by the former to the latter and later testified against Wilde in court to devastating effect. Neither Bosie nor Schwabe was prosecuted, even though a witness testified he had seen Schwabe and Wilde in bed together in Paris.

At the time of Wilde's libel case against Bosie's father, the Marquess of Queensberry, and subsequent trial for indecency in 1895, there were rumours of a cover-up: Bosie was the son of the infamous peer who started the whole process of discrediting Wilde; Schwabe was the nephew of Sir Frank Lockwood, the solicitor-general.

In court, Schwabe's name was never spoken aloud by prosecutors but was passed to the judge on a slip of paper. Schwabe was absent, and the discovery of these letters on the other side of the world provides a clue as to why.

"It was an established pattern that if young men from respectable families were behaving recklessly, they were sent abroad for a few months," says Caspar Wintermans, a Bosie biographer. "Bosie went to Egypt, and Robbie Ross, another intimate friend, to Switzerland." Schwabe, it now seems, had been sent even further away to keep him out of trouble.

The letters make it clear Bosie and Schwabe had an intense emotional and sexual relationship. "My darling pretty boy," Bosie wrote to Schwabe, "I really love you far more than any other boy in the world and shall always be your loving boy-wife, or your 'little bitch' if you prefer it."