The Iron Lady made the bizarre proposal in 1985, just a year after she was nearly killed in the IRA's Brighton bomb.
In late-night talks with her advisers, the Baroness said the Oliver Cromwell-style approach would not only solve the Troubles but content nationalists who “wanted to be” in the south.
The divisive recommendation was revealed by British diplomat Sir David Goodall, then adviser to Prime Minister Thatcher.
In 2001 he told a BBC documentary: “She said, if the northern [Catholic] population want to be in the south, well why don't they move over there?
“After all, there was a big movement of population in Ireland, wasn't there?
Sir David added: “Nobody could think what it was.
“So finally I said, are you talking about Cromwell, prime minister?
“She said, that's right, Cromwell.”
Cromwell — dubbed the Butcher of Ireland — was responsible for the slaughter of tens of thousands in the 1640s and 1650s. His forces hounded virtually all Catholic landowners from Ulster through Parliamentary invasion.
The 15th political leader is seen as a hate figure among nationalists — much like Lady Thatcher, whose death saw republican street parties across the province.
The Conservative Prime Minister’s “outrageous” plan did not stop at reviving the memory of Cromwell. She also called for the province’s border with the Republic to be redrawn because it was too difficult to patrol.
Sir Charles Powell, her then private secretary, also told the programme: “She thought that if we had a straight line border, not one with all those kinks and wiggles in it, it would be easier to defend.”
Despite being told of the folly of her idea, Thatcher refused to abandon it and called for a “security zone” on both sides of the border to help the British Army and RUC prevent IRA terrorists slipping over the border after attacks.