The battle, between 150 men from the Irish Guards and the Royal Engineers posted to the bleak military garrison known as the Death Star, ended in a "bloodbath", witnesses said.
Many casualties required medical treatment and several were taken to hospital with injuries ranging from broken noses to concussion. One soldier, who suffered a severely broken ankle, had to be flown back to the Haslar military hospital in Gosport, Hampshire, for urgent treatment.
The fight, which broke out on Christmas Day last year, but which has only just come to light, "all started as a traditional bunfight at lunch", a witness said. "But someone threw a potato and a can was thrown back. Then all hell broke loose.
"There were pools of blood on the floor. The military police were summoned and went in with dogs to break it up." Brig-adier Ian Campbell, the British commander at the garrison, immediately imposed tough disciplinary measures to clamp down on violent behaviour.
Limits have been placed on the opening hours of bars on the Mount Pleasant base, and weekend training exercises have been instigated. It is understood that at least one soldier was jailed for 28 days and others received shorter sentences.
Details of the incident underlined the long-standing morale problem of troops sent to the Falklands on four-month postings. Hundreds of soldiers and airmen, deprived of female company and unwilling to venture far from the mass of drab green buildings that make up the British base, often fall prey to a ghetto-mentality. Sources said petty squabbles assumed enormous significance and traditional loyalties became magnified.
The maze of bars, clubs, messes and accommodation blocks are linked by a bleak, two-and-a-half-mile, concrete-floored corridor. Accommodation Block 38 has been dubbed "the Bronx" because of its reputation for fighting and violent crime.
Senior officers freely admit their biggest headache is not maintaining a viable military deterrent to attack by Argentine forces, but how to maintain the men's morale 8,000 miles from home.
The traditional four-month posting is viewed by many troops as equivalent to a spell in prison. Pride of place often goes to "gozzomie" (goes home) calendars so that the days to their return to Britain can be marked off.
But the Ministry of Defence stressed it could not tolerate the type of "misbehaviour" seen at Mount Pleasant, which it viewed as a "very serious matter".