Margaret Thatcher branded Nigel Lawson’s indication that he would resign as Chancellor of the Exchequer “an absurd proposition”, a newly-released note describing the moment he told her reveals.

She wrote that she was having her hair set early on a Thursday morning at Number 10 when her private secretary Andrew Turnbull “came up to say Nigel Lawson wanted to see me”.

Mr Lawson had accused Professor Sir Alan Walters, Mrs Thatcher’s economics adviser, of undermining his position.

“The reason for his visit – which he had considered very carefully – was that unless I agreed to sack Alan Walters, he would hand in his resignation as Chancellor,” she wrote. “This seemed to me an absurd, indeed reprehensible proposition.

“Alan was a trusted consultant & Nigel a Chancellor.”

She underlined ‘Chancellor’.

Nigel LawsonNigel Lawson told Margaret Thatcher he would resign unless she ‘agreed to sack’ her economics adviser, Sir Alan Walters (PA)

“Nigel explained that Alan took a different view from him, his views sometimes came out in the press & this made his task intolerable,” Mrs Thatcher wrote. “I duly countered that Alan was an adviser and that Nigel and I made the decisions – so what was the problem.

“Moreover, no Chancellor allowed himself to be offput by an adviser and in my view no-one could possibly resign on the basis of such a flimsy and unworthy proposal.

“I said go away & think again.”

Both “flimsy” and “unworthy” were also underlined.

Mr Lawson resigned in October 1989, which came as a heavy blow to Mrs Thatcher and helped bring about the events of the following year that led to her downfall.

Chris Collins, of the Margaret Thatcher Foundation, said she had written the note for her memoirs and that in it she “came close to professing outright mystification”.

“She knew obviously it was a very big event,” he said. “She wrote these things down for the Falklands War, for the European budget argument and for (Soviet President Konstantin) Chernenko’s funeral so she’s putting Lawson’s resignation up there with those events.

“And she’s right – I think it was absolutely fundamental for her career.”