The British government considered leaking details of Irish "intransigence" during talks in 1990.
Britain's ambassador to the Republic, Sir Nicholas Fenn, envisaged an Anglo-Irish row in which international opinion and a substantial section of the Irish public would support them against the Dublin government.
An official file disclosed details of the fall-out from the devolution impasse following the Anglo-Irish Agreement.
Sir Nicholas blamed lack of progress in the political process under then secretary of state Peter Brooke on contentment with the status quo among members of the SDLP and the Republic's government.
Any new but failed talks would cause a potentially damaging blow to the SDLP while Sinn Féin's elections machine grew, he suggested.
The senior diplomat wrote: "We could leak Irish intransigence.
"We could expect an unusually sympathetic hearing in Dublin outside government circles.
"For once there is a prospect of an Anglo-Irish row in which a substantial section of Irish opinion, and indeed international opinion, would support us against the Irish government."
The Public Records Office of Northern Ireland (PRONI) has published government files from 1992 which also contains information dating back to 1990.
Much of the debate surrounded the inclusion of Sinn Féin and the IRA in political talks.
One record related to the political talks in 1990, four years before the IRA and loyalist paramilitaries were to declare their first ceasefire.
Margaret Thatcher was still prime minister at the time and her opposition to concessions to the IRA was well-known.
Discussion centred on how inextricably bound up the armed group was with Sinn Féin.
An Northern Ireland Office (NIO) official said: "To some extent Sinn Féin is a separate political entity.
"Our attitude to it crucially turns on the extent to which it is engaged in legitimate and constitutional political activity.
"It seems that to me we have no inherent interest in preferring the SDLP to Sinn Féin or any other potential movement speaking for nationalism provided it adopts a constitutional road.
"If it brought with it the strain of anti-clericalism which I detect in Sinn Féin that might have interesting possibilities for levering open the somewhat theocratic structures of Northern and Southern nationalism to the benefit of an accommodation with the unionist community."
