Last month saw the 30th anniversary of the Sabra and Shatila massacre, an appalling event that proved deeply damaging to Israel's international reputation at the height of the Lebanon War. It is worth reflecting that Britain's relationship with Israel is in far better shape now than it was then.

It may seem paradoxical that the period between 1979 and 1982 was one of severe crisis for Anglo-Israeli relations, since the then prime minister, Margaret Thatcher was a stalwart friend of Israel and had a very high regard for Anglo-Jewry. A remarkable number of Jews served in her cabinets. She was an outspoken supporter of Soviet Jewry, and had great admiration for Israel as a democracy surrounded by autocracies.

On becoming Conservative leader in 1975, Thatcher's strong support for Israel was clearly reflected through her role as president of the Finchley Anglo-Israel Friendship League. The Foreign Office felt that her involvement would harm Britain's relations with the Arab world and it was suggested that she might sever her connection. As Michael Tait, of the British Embassy in Amman, wrote: "It is presumably in the national interest to do what we can to counter Arab fears and suspicions that the leader of HM opposition is already a prisoner of the Zionists."

Thus, on the face of it, once Mrs Thatcher became Prime Minister, one might have expected a solid relationship between Downing Street and Menachem Begin's Likud government. The Foreign Office, under Foreign Secretary Lord Carrington, pushed hard for Britain to take a firm stand supporting Palestinian self-determination and to upgrade contacts with the PLO. Thatcher initially resisted this, arguing that Israel was a bulwark against the possible expansion of communist influence in the Middle East.

She was known for her fierce public stand against terrorists of all stripes and the PLO was no exception. Thatcher insisted that the PLO had to renounce terrorism and recognise Israel before a higher-level dialogue could begin. She also had reservations regarding the idea of an independent Palestinian state, as she feared it could be overrun by outside influences. Her preference was for Palestinian self-determination as part of a federation with Jordan - an option that was appealing to Jordan's King Hussein, Egypt's Hosni Mubarak and Israel's Shimon Peres.

Lord Carrington drafted a response but she decided that she would ‘prefer not to write to Mr Begin at present

Thatcher may initially have perceived Israel as a strategic asset against the USSR. Yet it was her strong anti-communist position which eventually resulted in a change in her thinking. In 1979, the year in which she became Prime Minister, the Soviets invaded Afghanistan and containment of the Soviets and political instability in the region acquired greater urgency. Along with the revolution in Iran, the invasion provided the context for a shift in the British approach to Israel in the early 1980s.

The Thatcher government's Middle East policy was dictated largely by concerns over threats to the stability of moderate Arab allies such as Jordan, Egypt and Saudi Arabia. Over time, there was growing agreement between the Foreign Office and Downing Street that a comprehensive settlement of the Arab-Israel conflict was urgently needed as a means to containing threats to western interests in the Middle East.

The difficulty for the government was that Begin was opposed to any territorial concessions to the Palestinians. Begin had only recently signed a peace treaty with Egypt. During a disastrous meeting with Begin in May 1979, Thatcher expressed concern that Sadat would be undermined and the Soviets would profit if there was no progress toward a comprehensive peace settlement.

Lord Carrington and Begin also clashed on several occasions over settlements. A letter to the Foreign Office from 10 Downing Street later disclosed that Thatcher feared that, "Mr Begin's attitude could kill the whole process of the search for a comprehensive settlement."

Tensions worsened in 1980, when Thatcher endorsed the EEC Venice Declaration, which called for an end to Israel's "territorial occupation" and expressed support for Palestinian self-determination and the PLO's association with peace negotiations. Begin was particularly upset about the shift in policy on the PLO, drawing Thatcher's attention to the fact that Fatah, the main component of the PLO, had convened in Damascus, days earlier, and called for Israel's destruction.

He wrote: "Madam Prime Minister. Did anybody since the days of Hitler and Goebbels, Goering, Rosenberg and Streicher ever declare more plainly and more precisely that the endeavour is to destroy both our people and our state again… And yet, the great, free, democratic countries of Europe assembled and asked us, the elected representatives of the people of Israel, the USA, and all other nations to recognise that organisation as a future partner in 'peace' talks. This is not only astonishing: As I said, it hurt us deeply."

In the letter, Begin referred to another sensitive matter - restrictions on arms sales. He wrote that he could not understand how Britain could deny his country defence equipment when it was selling hundreds of sophisticated Chieftain tanks to Jordan. Begin called on Thatcher to reconsider Israeli defence requests. Lord Carrington drafted a response but Thatcher decided that she would "prefer not to write further to Mr Begin at present." Her hostile attitude was influenced to some degree by his violent actions against the British prior to the establishment of the state of Israel. But there was clearly no rapport between the two leaders.

I Israel's ambassador to the UK, Shlomo Argov, accused Europe of betraying Israel in return for Arab oil. He later received a dressing down from Lord Carrington for engaging in "objectionable emotive innuendo". But British diplomats had long warned that Western oil interests would be damaged unless policy was kinder to the Palestinian cause - Argov had a point.

But Thatcher was also coming round to Lord Carrington's view, as shown by a letter to Jimmy Carter in January 1980. She asserted that, while the West had sought to reduce the risk of war with the Soviets, the Russians had "continued to pursue a policy of expansion and subversion wherever they felt they could get away with it". In countering the Soviets, Thatcher argued for providing encouragement to Muslim countries to denounce the Russian action in Afghanistan, and called for the acceleration of negotiations over the sale of British arms to Oman, Saudi Arabia and the Gulf States. And she drew Carter's attention to her Foreign Secretary's argument that the Saudis and other Arab countries were convinced that "the whole Western position in the area was undermined by the Arab/Israel conflict and the failure to solve the Palestinian problem".

Meanwhile, Israel's diplomats sought to mobilise the local Jewish community and Israel's supporters in a bid to neutralise the impact of the Venice Declaration. Argov believed that pro-Palestinian ministers were feeling the wrath of the local community and were ill at ease. The Israeli Ambassador viewed Anglo-Jewry as an asset to be employed to counter policies that were detrimental to Israel. Indeed, Argov believed this was the only option left. In a cable to Israel's Foreign Ministry, he wrote: "We should not be afraid of making noise - it will embarrass the British more than it will embarrass us… It would be easier and more convenient to limit the campaign to the diplomatic sphere. It would be a lot more complicated and arduous to conduct a public campaign but this is the only sphere where we have room for manoeuvre and action, including the need for the mobilisation of the Jewish community."

However, British Jewry was far from united in its support for the policies of the Begin government. The Thatcher government was hearing some dissenting voices within Anglo-Jewry, including the Board of Deputies. Thus, Thatcher told King Hussein in June 1980 that the local community disapproved of the Begin government's settlement policy.

Israel's government and the Anglo-Jewish leadership tended to view the Foreign Office as the main culprits of the new policy toward Israel. Lord Carrington had told Douglas Hurd, then a Foreign Office minister, of "being savaged by Israelis". The Foreign Secretary found himself subjected to incessant heckling during an address to a Jewish audience in London. Interestingly, the Prime Minister was rarely criticised by the local community, in spite of her general agreement with Carrington over the Middle East. Thatcher's support for Jewish causes and her warm relationship with the community tended to insulate her from such criticisms while the Foreign Office had historically shown a cool attitude towards the state of Israel.

T hings went from bad to worse with the outbreak of the Falklands War in April 1982 and Israel's invasion of Lebanon two months later. The war with Argentina presented difficulties, partly because of allegations about Israeli arms sales - the Foreign Office summoned Argov to demand that Israel end weapon sales to Argentina. Argov counterattacked in a public address, criticising Britain for "picking on" Israel when it was his country that had been subject to an arms embargo since 1973, while its enemies had been supplied with sophisticated weaponry.

Tragically, Argov was shot a few days later by a gunman from the Palestinian splinter group Abu Nidal, and was left permanently paralysed. The shooting of Argov has been widely seen as the trigger for Israel's invasion of Lebanon on June 6 1982, when Britain's war with Argentina was still at its height. Matters were exacerbated by the fact that the Thatcher government framed Britain's response to Israeli military actions increasingly through the prism of its experience of Argentina's invasion of the Falklands. If anything, Britain's judged Israel more harshly than it would otherwise have done.

Begin criticised what he perceived as double standards in a lengthy Knesset address. He charged that Thatcher had sent troops thousands of miles from British shores on grounds of self-defence. Yet Israel, taking defensive measures a few kilometres away, was being told it had no right to base its actions on self-defence.

On September 17 1982, Christian Phalangist militiamen entered the Palestinian refugee camps of Sabra and Shatila in Lebanon, and killed many hundreds of civilians. Israel faced a barrage of criticism as it was claimed that the Israeli forces had allowed the massacre to happen. The difficulties now confronting the bilateral relationship were encapsulated by a spat between the new British Foreign Secretary, Francis Pym, and Begin.

Pym had angered Begin by his reference to 500,000 homeless in south Lebanon. Kieran Prendergast, a senior British diplomat serving in Israel was informed of this during a lunch in Jerusalem with an Israeli counterpart. The Israeli told Prendergast that Begin had considerable respect for the professionalism of the Foreign Office: in his opinion, the British would not get their facts wrong; if Pym had started an "absurd rumour", Begin would assume this had been done deliberately.

Britain's ambassador to Israel, Patrick Moberly, also noted that Britain was accused of "leading the European pack" in calling for restrictions on arms sales to Israel.

There was great disquiet in the Jewish community over the stance of the Foreign Office. During the summer of 1982, senior representatives of the Jewish community and pro-Israeli MPs suggested Foreign Office attacks on Israel were encouraging an atmosphere of antisemitism. Douglas Hurd later sent a note to the Board of Deputies, stating "let us have no more talk of antisemitism".

Several months after Thatcher's 1983 election win, Begin resigned on grounds of ill health. His successor, Yitzhak Shamir, fared little better with Thatcher. In September 1984, Labour's Shimon Peres became Prime Minister as part of a national unity coalition. The Anglo-Israeli relationship eventually recovered, as he and Margaret Thatcher established a warm relationship. She would later become the first British Prime Minister to visit Israel while in office. But that's a story for another day.

Dr Azriel Bermant is a diplomatic historian, researcher and analyst. He is currently writing a book on Margaret Thatcher and the Arab-Israeli conflict