Margaret Thatcher thought it was "quite wrong" for immigrants to get council houses ahead of "white citizens", previously unpublished government papers show.
Files released to the National Archives show that soon after becoming prime minister, Lady Thatcher privately complained that too many Asian immigrants were being allowed into Britain.
The documents, which are published today under the "30 year rule", shed further light on Lady Thatcher’s attitudes on race and immigration, political issues that have remained controversial ever since.
They show that in July 1979, Lady Thatcher met Lord Carrington, her foreign secretary, and William Whitelaw, then home secretary, to discuss the plight of hundreds of thousands of "boat people" fleeing persecution in communist Vietnam.
The prime minister, who had publicly said that she sympathised with fears that Britain was being "swamped" by immigrant cultures, reacted sharply to the ministers' suggestions that thousands of the Vietnamese refugees should be welcomed.
Lord Carrington, who had visited refugee camps in Hong Kong where some of the boat people were being held, gave a "vivid account" of the conditions there, the minutes show.
He suggested that Britain take 10,000 of them over two years. Failure to take a significant number would lead to a "damaging reaction" at home and abroad, he said, and anything less than 10,000 would be "difficult to sustain" on the world stage.
But Lady Thatcher said that there were already too many people coming into Britain, according to the minutes.
She said that "with some exceptions there had been no humanitarian case for accepting 1.5 million immigrants from south Asia and elsewhere. It was essential to draw a line somewhere".
Mr Whitelaw entered the debate, suggesting to the prime minister that refugees were a different matter to immigrants in general.
He said that according to letters he had received, opinion favoured the accepting of more of the Vietnamese refugees.
Lady Thatcher responded that "in her view all those who wrote letters in this sense should be invited to accept one into their homes," the minutes disclose.
"She thought it quite wrong that immigrants should be given council housing whereas white citizens were not."
Lady Thatcher asked what the implications of such a move could be given that an exodus of the white population from Rhodesia – now Zimbabwe – was expected once majority rule was established.
She made clear, however, that she had "less objection to refugees such as Rhodesians, Poles and Hungarians, since they could more easily be assimilated into British society".
The meeting was held about 18 months after Lady Thatcher made comments in a television interview that came to be seen as a watershed in mainstream politicians’ handling of race and immigration.
"People are really rather afraid that this country might be rather swamped by people with a different culture," she told World In Action.
"If we do not want people to go to extremes we ourselves must talk about this problem and we must show that we are prepared to deal with it," she added. "We are not in politics to ignore people’s worries. We are in politics to deal with them."
The comments were held responsible for a collapse in support for the National Front, which had been gathering momentum in working class communities.
Urgh. Why why WHY do people still idolise this woman? Outside of her vile stances on certain issues (South Africa and apartheid stick in my mind), her policies have done so much long term damage to vast swathes of Britain. And yet you've still got people worshipping her! I hope to high heaven we never see the likes of her type ever again...
Indeed. Appropriate icon is appropriate.