A former head of the military told the defence secretary that a UFO sighting dubbed Britain's Roswell could be a "banana skin", official files show.
In 1985 Lord Hill-Norton wrote to Michael Heseltine about the "Rendlesham incident" in 1980, when US airmen in Suffolk thought they saw an alien ship.
Either a craft entered UK airspace with "impunity" or US airmen were capable of a "serious misperception", he wrote.
It is among the latest MoD files on UFOs released by the National Archives.
'Puzzling and disquieting'
The "Rendlesham incident" involved American airmen from RAF Woodbridge who reported seeing mysterious lights.
Witnesses said a UFO was transmitting blue pulsating lights and sending nearby farm animals into a "frenzy".
In 2003, ex-US security policeman Kevin Conde admitted that he and another airman had shone patrol car lights through the trees and made noises on the loudspeaker as a prank.
But in 1985, Lord Hill-Norton - a former chief of the defence staff and First Sea Lord - wrote to Mr Heseltine, the then-defence secretary, to express his feelings about the event.
In his letter, Lord Hill-Norton said he rejected the official MoD line that the case was of "no defence interest", adding that it displayed "puzzling and disquieting features which have never been satisfactorily explained by your department".
He said it was either the case that a piloted craft had entered and left UK airspace with "complete impunity" or "a sizeable number of USAF personnel at an important base in British territory are capable of serious misperception".
Lord Hill-Norton added: "There seems to be a head of steam building up on this matter, and I can see a potential 'banana skin' looming."
The release is part of a three-year project by the MoD and the National Archives to release files related to UFOs on the National Archives website.
Other incidents recorded in the latest batch of documents, which cover the years 1981 to 1996, include:
• Two men from Staffordshire who told police that, as they returned home from an evening out in 1995, an alien appeared under a hovering UFO hoping to take them away
• More than 30 sightings of bright lights over central England during a six-hour period in 1993, which led to the assistant chief of defence staff being briefed - and turned out to be caused by a Russian rocket re-entering the atmosphere
• Several sightings in Bonnybridge, central Scotland, which became the UK's UFO hotspot during the 1990s
• A UFO which was seen over the jazz stage at the Glastonbury Festival in June 1994. The two female witnesses reported that they turned to the people next to them to verify what they had seen but "they didn't look hard enough or take it seriously" http://news.bbc.co.uk/1/hi/uk/8202157.stm?ls