Margaret Thatcher tried to stop the "new fashion" of acid house parties after an all-night rave shattered the tranquillity of a Tory MP's uncle, newly released official papers show.

The Prime Minister asked to be briefed on what powers the police had to control the parties and months later legislation was introduced to tackle unlicensed gatherings.

However, she was warned by then Scotland Secretary Malcolm Rifkind that proposed laws should not affect "innocent events" such as barn dances.

Mrs Thatcher was alerted to the burgeoning rave culture after a party held in Bentley, Hampshire, in August 1989.

Archie Hamilton, MP for Epsom and Ewell, forwarded the Prime Minister a letter from his uncle Gerald Coke, who said he was "very disturbed" by the party which had lasted until 7.30am.

Mr Coke, a former magistrate, said there was a "feeling of collective anger and helplessness" that police could do nothing because it was a private party.

In a handwritten note on the letter, Mrs Thatcher was asked if the Home Office should provide a briefing on what powers police had to control the gatherings.

She replied: "Yes if this is a new 'fashion' we must be prepared for it and preferably prevent such things from starting."

The rise of acid house in the late 1980s saw huge outdoor raves take place across Britain - accompanied by the use of recreational drugs such as ecstasy.

Cabinet Office papers released by the National Archives show how, by the time of dance music's 'summer of love', concern about raves had spread to the highest level of Government.

But a memo in October 1989 from Carolyn Sinclair of the Number 10 policy unit showed officials were more concerned with "nuisance caused by the noise" than the growing use of ecstasy.

She said: "Drugs are not the main issue. The parties are a form of unlicensed public entertainment for which people buy tickets.

"What is needed is a way of hitting at the profits made by the organisers. This should discourage the craze."

By 1990 legislation was introduced heightening punishments for those organising parties without licences.

Changes to the law contributed to a shift in dance music culture that saw parties move from vast outdoor raves to clubs which could be more easily policed, licensed and monitored.