Prime minister Sir Alec Douglas-Home was kept in the dark about one of the biggest spy scandals of the Cold War because his home secretary did not want to "add to his burden", according to newly released files.

In 1964 Sir Anthony Blunt, the surveyor of the Queen's pictures, sensationally confessed that he was the so-called "fourth man" in the Cambridge spy ring, which also included Kim Philby, Guy Burgess and Donald Maclean.

Following an offer of immunity from prosecution, he admitted passing thousands of secret documents to the Russian KGB while working as an officer for MI5 during the Second World War.

But when his treachery was finally made public in 1979, Margaret Thatcher told an astonished House of Commons Sir Alec had not been informed of Blunt's admission even though he was the prime minister at the time.

Files released by the National Archives show the home secretary of the day, Henry Brooke, took it upon himself not to tell Sir Alec - a decision he admitted may well have been a mistake.

In a note to Mrs Thatcher thanking her for the way she handled her Commons statement, he wrote: "I have written to Alec to explain why in April 1964 I did not bring him in on what was happening about Blunt and to say how sorry I am if in my well-meant effort not to add to his burden I may, with hindsight, have exercised by discretion wrongly."

Eleven years later, when an American writer researching a book on the Queen, wrote to Downing Street to check Mrs Thatcher's original statement was correct, No 10 officials contacted Lord Home (as he was by then) just to make sure.

The 86-year-old wrote back: "My memory is pretty faulty, but I wasn't told about Blunt's activities before the knowledge was public property."

The files also show how, following Blunt's death in 1983, Mrs Thatcher rejected an offer to settle his estate duties through the donation of a valuable old master.

The biblical scene, Rebecca And Eliezer At The Well, by the 17th century French master Nicolas Poussin, was bought by Blunt in the 1930s for just £100, paid for by Victor Rothschild.

By the time of his death it was valued at £350,000 and Mrs Thatcher was initially enthusiastic when his estate offered the government the chance to acquire it for the nation at the knock-down price of £190,000.

But when she learned that would mean the Exchequer forgoing £200,000 in duties it would receive if the painting was sold on the open market while Blunt's estate would benefit to the tune of £40,000, she quickly changed her mind.

"No - I don't think we should buy it at this penalty," she wrote in a handwritten note.