Chilling new evidence that Britain and America came close to provoking the Soviet Union into launching a nuclear attack has emerged in former classified documents written at the height of the cold war.

Cabinet memos and briefing papers released under the Freedom of Information Act reveal that a major war games exercise, Operation Able Archer, conducted in November 1983 by the US and its Nato allies was so realistic it made the Russians believe that a nuclear strike on its territory was a real possibility.

When intelligence filtered back to the Tory government on the Russians' reaction to the exercise, the prime minister, Margaret Thatcher, ordered her officials to lobby the Americans to make sure that such a mistake could never happen again. Anti-nuclear proliferation campaigners have credited the move with changing how the UK and the US thought about their relationship with the Soviet Union and beginning a thaw in relations between east and west.

The papers were obtained by Peter Burt, director of the Nuclear Information Service (NIS), an organisation that campaigns against nuclear proliferation, who said that the documents showed just how risky the cold war became for both sides.

"These papers document a pivotal moment in modern history – the point at which an alarmed Thatcher government realised that the cold war had to be brought to an end and began the process of persuading its American allies likewise," he said.

"The Cold War is sometimes described as a stable 'balance of power' between east and west, but the Able Archer story shows that it was in fact a shockingly dangerous period when the world came to the brink of a nuclear catastrophe on more than one occasion."

Able Archer, which involved 40,000 US and Nato troops moving across western Europe, co-ordinated by encrypted communications systems, imagined a scenario in which Blue Forces (Nato) defended its allies after Orange Forces (Warsaw Pact countries) sent troops into Yugoslavia following political unrest. The Orange Forces had quickly followed this up with invasions of Finland, Norway and eventually Greece. As the conflict had intensified, a conventional war had escalated into one involving chemical and nuclear weapons.

Numerous UK air bases, including Greenham Common, Brize Norton and Mildenhall, were used in the exercise, much of which is still shrouded in secrecy. However, last month Paul Dibb, a former director of the Australian Joint Intelligence Organisation, suggested that the 1983 exercise posed a more substantial threat than the Cuban missile crisis of 1962. "Able Archer could have triggered the ultimate unintended catastrophe, and with prompt nuclear strike capacities on both the US and Soviet sides, orders of magnitude greater than in 1962," he said .

The exercise took place amid heightened international tension. In September 1983 the Russians shot down a Korean Airlines Boeing 747, killing all 269 people on board, after the plane had mistakenly strayed into their airspace. There is evidence to suggest that the Russians thought the Boeing was an American spy plane.

Earlier in the same year the US president, Ronald Reagan, made a high-profile speech describing the Soviet Union as "the evil empire" and announced plans to build the "Star Wars" strategic defence initiative. With distrust between the US and USSR at unparalleled levels, both sides were operating on a hair trigger.

As Able Archer commenced, the Kremlin gave instructions for a dozen aircraft in East Germany and Poland to be fitted with nuclear weapons. In addition, around 70 SS-20 missiles were placed on heightened alert, while Soviet submarines carrying nuclear ballistic missiles were sent under the Arctic ice so that they could avoid detection.

Nato and its allies initially thought the Soviet response was the USSR's own form of war-gaming. However, the classified documents obtained by the NIS reveal just how close the Russians came to treating the exercise as the prelude for a nuclear strike against them.

A classified British Joint Intelligence Committee (JIC) report written shortly afterwards recorded the observation from one official that "we cannot discount the possibility that at least some Soviet officials/officers may have misinterpreted Able Archer 83 and possibly other nuclear CPXs [command post exercises] as posing a real threat." The cabinet secretary at the time, Sir Robert Armstrong, briefed Thatcher that the Soviets' response did not appear to be an exercise because it "took place over a major Soviet holiday, it had the form of actual military activity and alerts, not just war-gaming, and it was limited geographically to the area, central Europe, covered by the Nato exercise which the Soviet Union was monitoring".

Armstrong told Thatcher that Moscow's response "shows the concern of the Soviet Union over a possible Nato surprise attack mounted under cover of exercises". Much of the intelligence for the briefings to Thatcher, suggesting some in the Kremlin believed that the Able Archer exercise posed a "real threat", came from the Soviet defector Oleg Gordievsky.

Formerly classified files reveal Thatcher was so alarmed by the briefings that she ordered her officials to "consider what could be done to remove the danger that, by miscalculating western intentions, the Soviet Union would over-react". She ordered her officials to "urgently consider how to approach the Americans on the question of possible Soviet misapprehensions about a surprise Nato attack".

Formerly secret documents reveal that, in response, the Foreign Office and Ministry of Defence drafted a joint paper for discussion with the US that proposed "Nato should inform the Soviet Union on a routine basis of proposed Nato exercise activity involving nuclear play".

Information from the JIC report and Gordievsky was shared with Reagan, who met the spy and was apparently so swayed by the arguments that he pushed for a new spirit of detente between the US and USSR.

However, Burt stressed that the end of the cold war did not mean that the risks had gone away.

"Even though the cold war ended more than 20 years ago, thousands of warheads are still actively deployed by the nuclear-armed states," he said. "We continue to face unacceptably high risks and will continue to do so until we have taken steps to abolish these exceptionally dangerous weapons."

• This article was amended on 2 November. It originally said that the Korean Airlines plane shot down in September 1983 was a Boeing 737. This has been corrected.