The documents from the 1980s reveal Mrs Thatcher wanted to make state schools independent of local authorities. This has been the central plank of the current government's education reforms.
In 1986, policy adviser Oliver Letwin wrote that she had "failed" to give people more responsibility for their own lives within the education system.
In Mrs Thatcher's personal files, there is a critical, very direct memo from Mr Letwin - his "swansong" as a member of Mrs Thatcher's policy unit. "You were elected to give back to individuals a greater degree of responsibility for their own lives. In education, you have so far failed," he wrote.
He said there had been no effort to change the "framework" - a point endorsed by Mrs Thatcher with a large black tick in the margin - and that education was still "a nationalised industry".
Mr Letwin, who is still an MP and a Cabinet Office minister, acknowledged that radical restructuring would not be popular in some quarters. "It would provoke intense hostility" from the local authorities and the teaching unions, he wrote.
However, he saw it as the only way to improve the "quality" of schools.
Like Michael Gove, who stood down as education secretary in July this year, Mr Letwin believed giving power to the "customer" - the parents - would drive school improvement.
Mr Letwin suggested state schools could "declare UDI", rather like academies today, and suggested extending the "assisted places" scheme where the state paid for places at independent schools. Parents could then have the choice of moving their children if they were unhappy with the local state school - just as Free Schools are intended to provide an alternative under the current government.
Meanwhile, the former prime minister, secretly voiced fears of an Asian rising in Britain if Irish nationalists were allowed to express their identity in Northern Ireland, newly-declassified government files reveal.
In a crucial peace-building summit between the then prime minister and Ireland's premier Garret FitzGerald in 1984, Mrs Thatcher said she could not understand why Catholics in the region were looking for certain rights.
At the November 19 talks in Chequers, the Tory leader said there were minorities all over Europe who were not making the sort of claims nationalists were for reforms in policing, justice, equality and power-sharing.
During their exchanges, described by those at the top-level meeting as rapid and vigorous, Mrs Thatcher fretted about the wider consequences of addressing Catholic alienation in relation to ethnic minorities in Britain.
She said: ''... if these things were done, the next question would be what comes next? Were the Sikhs in Southall to be allowed to fly their own flag?''
