Hostilities broke out at a private lunch after the former prime minister repeated her critical views about the Germans, provoking Winston Churchill's grandson to defend them.
Details of the conflict were disclosed yesterday by Old Etonian Mr Soames, who said in a newspaper interview: "I had a frightful row with Lady Thatcher the other day. She was banging on about the Germans and, I have to tell you, the Germans are our close, close friends."
He did not leak the content of Lady Thatcher's outburst, but added: "Lady Thatcher and many within this country deeply resent the Germans."
Mr Soames gave a taste of his robust counter-blast, saying: "I regard the Europhobes' views as being damaging to the interests of our country, our party, and in every way the interests of the nation."
However, a well-placed Tory source told the Independent that he was exaggerating: "He came out of it with a limited amount of credit, with which he should have been satisfied. As it is, he is over-colouring it, and that surprises me."
Even as Prime Minister, Margaret Thatcher believed the Germans were plotting to use Brussels as a backdoor route to a "Fourth Reich" - achieving by diplomatic stealth what they had failed to do in two world wars.
Although she is thought to have shared the outspoken views of her trade secretary, Nicholas Ridley, she was forced to demand his resignation from in 1990, after he had told the Spectator that Germany would dominate a united Europe, adding: "You might as well give it to Adolf Hitler."
At a Foyle's literary lunch to launch the final volume of her memoirs, The Path to Power, Lady Thatcher said in June that Britain had not fought the last war "for the diminution of democracy in Europe under the domination of Germany".Reuse content