Margaret Thatcher’s funeral will have a Falklands War theme and more than 700 armed forces personnel will take part in it, Downing Street announced today.

Army, Royal Navy and Royal Air Force personnel now serving on ships and in regiments and units which played a key role in the 1982 conflict with Argentina will carry the former Prime Minister’s coffin into St Paul’s Cathedral for the service next Wednesday. The 10 coffin bearers will be drawn from the Royal Marines, the Scots Guards, the Welsh Guards, the Parachute Regiment, the Royal Gurkha Rifles and the RAF. The Welsh Guards suffered some of the heaviest losses in the war. Thirty-two were among 48 British troops killed when the Sir Galahad landing ship was bombed by Argentinian jets.

The 1982 war, following the Argentinians’ invasion of the South Atlantic islands 8,000 miles from Britain, transformed Lady Thatcher’s political fortunes and helped her secure a landslide victory at the 1983 general election. Some Labour eyebrows were raised at the decision to have such a clear reminder of the war at next week’s funeral because it claimed the lives of 255 Britons and 649 Argentinians. “There is a fine line that the organisers should be wary of crossing,” said one Labour MP.

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Dr Giles Fraser, who resigned as Canon Chancellor of St Paul’s in 2011 over plans to evict Occupy movement protestors, said: "We have to be very, very careful that this is not just an opportunity for political point-scoring through a funeral.” He added: “I'm not saying that it shouldn't be at St Paul's Cathedral but I am saying it's difficult to get the tone right. It can't be sort of Elgar and flag-waving, it has to be something less triumphalist than that.”

The forces’ heavy involvement was approved today at a Cabinet Office meeting of the committee co-ordinating the arrangements for the ceremonial funeral of Baroness Thatcher, who died on Monday aged 87. It includes two representatives of her family – Julian Seymour, her executor, and Mark Worthington, her long-serving private secretary.

Asked if Lady Thatcher had requested the funeral of a “war leader”, the Prime Minister’s official spokesman replied that there had been a significant military involvement in previous ceremonial funerals, adding: “Clearly Lady Thatcher has a strong association with the armed forces.” He said: “Her family have been very much at the heart of the preparations.” Number 10 confirmed that the coffin bearer party would “include current service personal from ships, units and regiments notable for their service in the Falklands campaign.”

Lady Thatcher’s coffin will be taken from the Palace of Westminster to St Clement Danes Church in the Strand. It will be borne in procession to St Paul’s on a gun carriage and the route will be lined by servicemen and women. Bands from all three services will be positioned along the route. There will be a guard of honour when the coffin arrives at St Paul’s and a step lining party including 18 personnel and Chelsea pensioners.

Downing Street refused to disclose how much public money will be spent on the Thatcher funeral, but played down reports that it could be as high as £10m. It said the figure would be announced after next Wednesday’s event. The Thatcher family will contribute towards the cost.

William Hague, the Foreign Secretary, said: “The rebate she negotiated for this country from the EU has brought us so far £75bn - which is twice the size of our annual defence budget. I think that puts money in perspective... so I think we can afford to contribute to a funeral.”

'Service should not be Elgar and flag-waving'

Dr Giles Fraser, who resigned as Canon Chancellor of St Paul's in 2011 over plans to evict the Occupy anti-capitalist demonstrators from the cathedral premises, has warned his former colleagues of the potential for them to again find themselves the target of protest, at next Wednesday's funeral.

"In evicting Occupy, St Paul's made a choice about whose side it was on. It has to be extremely careful in hosting Mrs Thatcher's funeral it doesn't do the same thing again," he told London Evening Standard.

He said later: "We have to be very, very careful this is not just an opportunity for political point-scoring through a funeral. I'm not saying it shouldn't be at St Paul's Cathedral but I am saying it's difficult to get the tone right. It can't be sort of Elgar and flag-waving, it has to be something less triumphalist than that."

Chloe Hamilton