An audacious MI5 plot to set up a "fifth column" of rightwing extremists succeeded in attracting "probably hundreds" of Nazi and fascist sympathisers in Britain, according to secret files released on Friday.

The plan was prompted by MI5's concern that the British branch of the German firm Siemens ran what it described as a "vast espionage organisation" before the outbreak of the second world war.

MI5 first attempted to infiltrate the company through a "correspondents' club" to attract single female employees. But it proved too successful – one employee became too emotionally attached to the undercover MI5 agent.

In another operation, an MI5 agent codenamed Jack King came into contact with Marita Perigoe, the pro-Nazi wife, of mixed Swedish-German origin, of an interned member of the British Union of Fascists (BUF). King, whose real name is not disclosed, described himself to Perigoe as "an English representative of the Gestapo".

He gave his contact the task of providing a list of people "100% loyal to the Fatherland … for use in the time of invasion" by Germany. She reported individuals willing to give secrets of Rolls-Royce engines, information about jet propulsion and radar, and details of how the town of Hastings would be defended.

By the end of the war, Perigoe's network – which she passed on to King – amounted "certainly to scores, probably to hundreds" of Nazi sympathisers, mainly in the London area, in an operation the MI5 files describe as "the most valuable single source of information" about subversive fascist intentions in Britain.

MI5 described Perigoe as "a masterful and somewhat masculine woman" and a "typical arrogant Hun", the files show. She was said to despise the BUF because it maintained "some sort of loyalty" to Britain.

"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", MI5 recorded at the end of the war. It added: "But it gradually became apparent that the bulk of the material could be relied on as substantially accurate".

An MI5 officer warned: "With the example of Hitler before us, I think it is dangerous to disregard extremists merely because they can be dubbed neurotics."

He warned of a "native fascist revival" and the potential "growth of a long-term Germany underground movement preparatory to a third attempt at world domination". The files do not say what happened to the Nazi sympathisers named in them.

Also released on Friday are files on Jewish terrorist activities in Britain. Christopher Andrew, the author of MI5's official history, says the main terrorist threat faced by MI5 in the aftermath of the second world war came from Zionist extremists of the Irgun, led by the future Israeli prime minister Menachem Begin, and the Stern Gang, the last terrorist group which actually described itself as terrorist.