It was the most unlikely place to find a treasure trove: tucked inside a battered metal canister covered in a tatty plastic raincoat and hidden in a remote German estate, where it had been hastily buried in the dying days of the Nazi regime.

The men who discovered it in the weeks following the end of the war were dubbed ‘documents men’, Allied soldiers charged with finding the secrets of Hitler’s Third Reich. Inside was unique microfilm that revealed the innermost workings of the Nazi regime. Back in London, the haul was triumphantly called pirates’ gold.

But within days, they realised with horror that the thousands of files detailing every part of the Nazi regime’s inner workings contained incriminating correspondence relating to the former King of England, Edward VIII, his wife – the divorced American Wallis Simpson, whom he married in 1937 – and their links to dictator Adolf Hitler.

Honoured guests: Edward and Wallis depart Hitler’s mountain retreat in October 1937, after meeting the Fuhrer

The book claims that the Duke, center, was angered at being forced to abdicate the throne in 1936 and was willing to work with Adolf Hitler, right, to regain it

This was dynamite that could explode beneath the Monarchy.

For the next 12 years, war leader Winston Churchill, post-war Prime Minister Clement Attlee, American President Eisenhower and others in the political elite attempted to destroy or cover up the damning Windsor dossier.

Even King George VI, at loggerheads with his elder brother, the Duke of Windsor, since his abdication in 1936, was ‘greatly agitated’.

Now my three years of research have uncovered the extent of Edward’s Nazi sympathies and the monumental efforts lasting more than a decade by the Establishment on both sides to trace, conceal and destroy vital documents that they feared could bring down the House of Windsor.

The jaw-dropping contents of the file concerned the wartime activities of the Duke and Duchess of Windsor, particularly their brief stay in Spain and Portugal after the fall of France in 1940. The secret papers painted an astonishing portrait of a man who was disaffected with his position, disloyal to his family and unpatriotic towards his country.

The file revealed that such was his disaffection that Churchill, his friend and supporter, had threatened him with court martial unless he obeyed military orders.

During this Iberian sojourn, many of Edward’s unguarded utterances were secretly recorded by German diplomats and pro-Fascist Spanish aristocrats who sent the material in minute detail to Berlin, where Hitler and his right-hand man, foreign minister Joachim von Ribbentrop, pored over the Royal runes.

The transcripts reveal that Edward, who felt he had been ostracised and humiliated in the wake of his abdication in 1936, was outspoken in his criticism of Churchill and the war and was convinced that, if he had stayed on the throne, conflict could have been avoided.

He was angered at being forced to abdicate the throne in 1936 because he wanted to marry American divorcee Wallis Simpson, left, and was willing to work with Hitler, right

The Duke of Windsor chats to Hitler’s propaganda chief Joseph Goebbels at a party in Berlin in 1937

Only the continued heavy bombing of British cities, he believed, would bring the United Kingdom to the negotiating table. Taken at face value, the Duke was speaking high treason, giving succour to the enemy when Britain faced its darkest hour of the war. If the German files were to be believed, here was a man who had no faith in his country’s leaders or his own family. He was also a man who fully approved of Hitler and his spurious plans for peace.

Worryingly, they chimed with Washington’s intelligence. American ambassadors to Spain and Portugal who met the couple at this time were so alarmed that they sent messages to Washington reporting that the couple were ‘indiscreet and outspoken against the British government’. Historian John Costello later described the Duke’s sentiments as ‘tantamount to treason’.

Such was the dangerous importance of these unguarded private utterances that it gave the Nazi high command complete faith in a sinister plot to entice the Duke and Duchess to stay in Spain, where he would wait for the Germans to invade and conquer his homeland. Then the man who spent his honeymoon in Austria before the war and visited Germany in October 1937 as Hitler’s honoured guest would return to Britain as the Fuhrer’s puppet king.

The Nazis even had a code name for the plot – Operation Willi – which was the extraordinary climax to a bizarre entanglement between the Duke, the Duchess and Hitler which began shortly after he was elected German Chancellor in 1933.

Not only did Hitler try to marry Edward, then Prince of Wales, to a young German princess, but he then flooded London with a slew of Nazi supporting aristocrats with orders to find out what their Royal cousins were thinking. The stammering Duke of York, Edward’s brother and later King George VI, was blunt about this blue-blooded Nazi courtship. ‘My own family relations in Germany have been used to spy and get particulars from other members of my family,’ he later observed. Edward and Wallis welcomed them with open arms.

The couple, pictured, married at a private ceremony on June 3, 1937 in France and honeymooned in Germany

Edward, right, celebrates his marriage to Wallis Simpson in France in June 1937 with a cup of tea

As serious doubts began to be raised at home about Edward’s fitness to be King, he was viewed inside the Third Reich as a friend and ally of the Nazi regime.

Wallis Simpson came under special scrutiny from both sides. Even Hitler was intrigued by her relationship with the pompous but charming Von Ribbentrop, who had singled her out for special attention when he was Nazi ambassador in London in the 1930s.

It was said Von Ribbentrop sent Wallis bouquets of flowers, ordered from society florist Constance Spry, to her home. The Prince of Wales’s cousin, the well-informed Duke of Württemberg stoked the rumour mill, stating that the bouquets of 17 carnations (some say they were roses) represented the number of occasions Wallis and Von Ribbentrop had slept together.

Hitler is a great man... Churchill's a warmonger

Such was the concern about the proximity of Wallis and her then husband Ernest to the future King that at the height of her clandestine affair with Edward in 1935, Scotland Yard detectives were ordered to watch the couple and delve into their private life.

It emerged that not only was Ernest hoping for a high honour when the new King took the throne, but his wife was two-timing him and Edward with a third man, Ford car salesman Guy Trundle.

It was also discovered that a neighbour in Wallis’s apartment block, Bryanston Court in Central London, was Princess Stephanie von Hohenlohe – a woman who had been monitored by the security services since 1928. They considered her a political intriguer – possibly a Nazi spy, but certainly a woman with direct access to Hitler himself. It was not long before worried Establishment figures wondered if Princess Stephanie and Wallis were working hand-in-glove, and Bryanston Court was a nest of espionage and plotting.

Military leaders had serious concerns about the Duke of Windsor, right, and his wife Wallis Simpson, left

MRS Simpson had already been described by Palace courtiers as a witch, a vampire and a high-class blackmailer. Soon she was being spoken of as a Nazi spy. Within weeks of Edward ascending the throne in January 1936, there was considerable concern that the Government red boxes – which to this day are ferried to the Palace containing intelligence reports, policy briefings and important documents needing Royal approval or signature – were being treated in a cavalier manner, their contents accessible to prying eyes.

The pre-war Prime Minister, Stanley Baldwin, learned that the French and Swiss governments knew that the King was discussing everything with Mrs Simpson. As she was believed to be ‘in the pocket of Ribbentrop’, this was a matter of grave concern.

American ambassador Robert Worth Bingham reported to President Roosevelt: ‘Many people here suspect that Mrs Simpson is in German pay. I think this is unlikely.’

All the while Hitler was observing developments from afar, sitting in his private cinema watching newsreels of the new young King, Edward VIII, and his American mistress. At least it made a change from his usual diet of Disney cartoons.

The King’s possible reaction was on Hitler’s mind when he occupied the Rhineland in March 1936 – effectively tearing up the Treaty of Versailles. His calculation that Edward would give him tacit support proved correct. That April the King sent Hitler a telegram wishing him ‘happiness and welfare’ for his 47th birthday.

For all his scrutiny of the youthful and glamorous new King, Hitler badly misjudged his quarry. He felt Edward was a man of the world, a man of power and ambition. And Von Ribbentrop had grossly overestimated Edward’s influence over British politics, believing he was capable of dictating foreign policy.

Despite concerns, the Duke of Windsor made trips to the War Office, pictured, during the conflict

So the Fuhrer was astonished when, in December 1936, Edward gave up his empire for Wallis, the twice-divorced American. Propaganda minister Joseph Goebbels caustically observed: ‘He has made a complete fool of himself… it was lacking in dignity and taste.’ Hitler believed Edward had been ousted by Churchill, who had manoeuvred him into a dubious marriage.

But even after the abdication, the Nazis still kept faith, inviting him to visit the Fatherland in October 1937.

During the 12-day visit, Germany was bedecked with alternating Union Flags and swastikas, and Wallis accepted curtsies from high and low-born alike. She was even referred to as ‘Her Royal Highness’, a title King George VI had pointedly denied her.

The Nazi leadership was impressed, seeing in the Duke one of their own. Goebbels described him as a ‘tender seedling of reason’. Nonetheless the couple’s phones were tapped throughout their visit. Controversially, the former King gave a Nazi salute when he met Hitler and other leaders. He later confirmed he did salute Hitler during their private 50-minute conversation at his mountain retreat at Berchtesgaden, but insisted ‘it was a soldier’s salute’. After taking tea, they bade each other a fond farewell, never to meet again. As they drove away Hitler remarked to his interpreter: ‘The Duchess would have made a good queen.’

This was emphatically not the view of Queen Elizabeth, later the Queen Mother. Once war was declared in September 1939 and Wallis and Edward paid a short visit to London before being packed off to France, she could barely contain her loathing. She wrote to Queen Mary – mother of her husband George and Edward: ‘I trust she will soon return to France and STAY THERE. I am sure she hates this dear country and therefore she should not be here in wartime.’

Such was the routine suspicion and hostility felt towards the couple that when Churchill, as First Lord of the Admiralty, showed the Duke around the Secret Room – where the exact position of the Royal Navy and Kriegsmarine fleets were plotted – the Earl of Crawford, a government Minister, warned: ‘He will blab and babble out state secrets without realising the danger.’

Edward’s behaviour did not inspire confidence. Though he schemed briefly to lead an international peace movement – which many believed would only add succour to the Nazi cause – he expended more effort playing golf and agitating to have his French chef released from Army duty. And there remains considerable circumstantial evidence that loose-lipped table talk by the Duke while he was in Paris made its way back to Berlin and influenced Hitler’s military strategy.

The Duke, pictured here making his abdication speech, believed Britain could be bombed to submission

Wallis’s friend, playwright Clare Boothe Luce, recalled an evening in May 1940 when the Windsors were playing cards in their Paris home. Luce was listening to BBC radio news describing a Luftwaffe fighter attack on coastal towns. When she remarked how sorry she felt for the casualties, the Duchess looked up briefly from her cards and replied: ‘After what they did to me I can’t say I feel sorry for them – a whole nation against one lone woman.’

The self-absorption of Edward and Wallis meant it was entirely in character that, when the Germans advanced south through France in 1940, he demanded that a Royal Navy ship pick them up from Nice.

The former King was bluntly told to drive to Spain, ostensibly a neutral country, and take his chances.

Their four-car convoy included a hired van just for the Royal luggage. They were however motoring into a trap, one partially of their own making. Within days of their arrival in Madrid, German diplomats were working with their Spanish allies to ensure the former King remained in Spain. The couple were offered a small fortune and a palace in Ronda in southern Spain to sit out the war.

Edward was so tempted by the offer that he telegraphed Churchill and asked if there was any need for a prompt return to London. Churchill ordered that he be moved to neighbouring Portugal.

According to German diplomats, the Duke was seen as ‘the only Englishman with whom Hitler would negotiate any peace terms, the logical director of England’s destiny after the war’. Like Vidkun Quisling, the Nazi appointee to rule Norway, and Marshal Petain in occupied France, the Duke of Windsor was the perfect puppet.

Operation Willi was treated with deadly seriousness by Hitler and Von Ribbentrop, the Fuhrer ordering his top spymaster Walter Schellenberg to travel to Lisbon to entice or if necessary kidnap the Windsors. Their every move, gesture and sentiment was pored over, with German diplomats looking for signs of encouragement.

The Duke twice secretly contacted the Nazis via a Spanish diplomat, asking first if they would protect his two rented houses in Paris and Cannes and their contents. The captured microfilm revealed the potentially explosive negotiations – the Germans agreed to his request. Even the ambassador brother of Spanish dictator Franco was shocked by Edward’s behaviour. ‘A prince does not ask favours of his country’s enemies. To request the handing over of things he could replace or dispense with is not correct.’

Moreover, the couple’s defeatist attitude in private conversations greatly concerned the British ambassador. ‘The Duke believed that Great Britain faced a catastrophic military defeat which could only be avoided through a peace settlement with Germany,’ observed historian Michael Bloch.

The Duke even stunned the American journalist Fulton Oestler by saying in an interview during the war, when he had been appointed Governor of the Bahamas: ‘It would be a tragic thing for the world if Hitler was overthrown, Hitler is the right and logical leader of the German people. Hitler is a very great man.’

The Duke of Windsor, right, viewed Winston Churchill, left, as a warmonger and wanted peace with Germany

Little wonder that a draft letter written on Churchill’s behalf in 1940 informing the prime ministers of the Dominions about the decision to appoint the Duke Governor of the Bahamas focused on his ‘pro-Nazi inclinations’ and the fact that he may become a centre of intrigue.

Edward’s disloyalty knew no boundaries. The Duke considered his younger brother George ‘utterly stupid’, the Queen an intriguer and Churchill a warmonger. At least that was how the Germans described it. Such was the collapse in relations between Edward and the British Government when he was in Portugal that the Duke believed he would be arrested if he went to the British Embassy in Lisbon. Little wonder that the Windsor File was so potentially incendiary.

When he was shown the dossier after the war, Churchill immediately insisted that it be destroyed lest it damage the standing of the Monarchy. So did the King, the Prime Minister and Allied Supreme Commander Dwight Eisenhower.

However several copies had been made, some lodged with the Americans. American academics, drafted in to the wartime State Department, warned that they would be breaking the law if they destroyed the Windsor file.

Their views prevailed. But it took another 12 years, after years of British delaying tactics, for the file to be published.

The Duke of Windsor, who was worried about the publication, largely escaped scot-free, the media briefed to see him as an unwitting and innocent victim of misguided Nazi intrigues.

Today, with the help of new documents and letters never previously seen, we can see this dark corner of British history in a more honest light – how seriously the Windsors’ Nazi sympathies were taken at the time and the deep alarm the postwar discovery of the Nazi files caused at the highest levels.

The wrangling between the British and their American allies about the Windsor File was not without cost. It created a sour climate of suspicion and distrust that endured, with the Americans perplexed that the British would expend so much diplomatic and political capital on a man without public position who was effectively exiled from his homeland.

It was seen in Westminster as a small price to be paid to maintain the illusion of Monarchy as the national crucible of honour, duty and loyalty.