The British government had contingency plans in July 1972 to re-partition Ireland and forcibly move hundreds of thousands of Catholics and Protestants in what would today be called an "ethnic cleansing" operation.
The result would have been a virtual Protestant-only "sectarian statelet", the planners admitted.
This is the most sensational revelation to come from the release of Cabinet papers in London and Dublin under the 30-year rule.
The plan, drawn up in great secrecy on the orders of the British Prime Minister, Mr Edward Heath, was "addressed to a situation in which we are on the point of losing control of events unless we take very severe action indeed".
Although the plan was never implemented, its drafting under Sir Burke Trend, Secretary to the Cabinet, showed a mood of near panic as the IRA ceasefire in July of that year broke down, followed by Bloody Friday, when the IRA set off 26 bombs in Belfast, killing 11 people and injuring 130.
The officials drawing up the plans to transfer large numbers of Catholics and Protestants to safe enclaves expressed doubts about its success which would depend on the "completely ruthless" use of force.
The papers show how relations between London and Dublin were close to breaking point following Bloody Sunday when 13 unarmed civilians were shot dead by British paratroops in Derry on January 30th. This was followed by the burning of the British embassy in Dublin. The Taoiseach, Mr Jack Lynch, in a phone call on the night of Bloody Sunday told Mr Heath that London should take over control of the army in Northern Ireland from Stormont, which he said should be replaced.
Mr Lynch said he knew a British newspaper in its report the next day would say that there had been a "massacre" and that the paratroopers had gone "beserk".
Mr Heath rejected these accusations saying that neither leader should make any judgments at this stage.
As Mr Heath prepared to suspend Stormont on March 24th and bring in direct rule, he ordered a list of "sanctions" against the Republic to be ready if Dublin did not co-operate. These included identity cards and work permits for the almost one million Irish immigrants in Britain, the freezing of Ireland's sterling balances and exchange controls.
To work the sanctions would have to be "short, sharp and painful" but an official report was dubious about their effectiveness.
Another report reveals that Dublin was allowing the British ministry of defence to operate secret radio stations on Irish territory.
Mr Heath made sure he kept Queen Elizabeth informed during this period as she was cruising on the royal yacht.
She expressed her appreciation saying: "It is hard to believe that a more complicated and intractable problem exists."
The Irish Government papers are less informative on Anglo-Irish relations but show the tensions that existed between Mr Lynch and Mr Heath as the latter continually criticised what he saw as Dublin's failure to crack down on IRA active service units operating from south of the Border.
During a visit to the Vatican, Mr Heath tried to enlist the help of Pope Paul V1 to condemn the IRA.
He also asked the Pope to put pressure on Cardinal Conway to persuade Catholic politicians in Northern Ireland to attend political talks which they were boycotting.
The Pope expressed concern about internment to the British Prime Minister, saying "world opinion" was against it.