Foreign secretary Lord Carrington and his team of ministers resigned as the fleet left Portsmouth in a bid to retake the beleaguered Falkland Islands.
Defence secretary John Nott tendered his resignation at the same time – ‘as a matter of honour’ –but it was refused by the prime minister.
Lord Carrington quit in the face of mounting Tory fury at his handling of the crisis.
Other members of the foreign office team joined him as the row over Britain’s humiliation grew.
In his letter of resignation, Lord Carrington wrote: ‘We must do everything we can to uphold the right of the islanders to live in peace, to choose their own way of life and to determine their own allegiance.
‘The fact remains, the invasion has been a humiliating affront to this country.’
Mrs Thatcher turned down Mr Nott’s resignation as she wished him to remain at the post during the military operations.
She told him: ‘It is vital you continue as secretary of state as our forces prepare for the possibility of armed action – I have the fullest confidence in your ability to carry out the crucial tasks ahead.’