Revealed: the careless mistake by Bletchley's Enigma code-crackers that cost Allied lives

The mathematicians at Bletchley Park may have figured out the Nazis' code, but their ciphers were broken too. Claudia Joseph explains how the catastrophic failure to react led to the loss of hundreds of ships

For 60 years the codebreakers at Bletchley Park have been credited with the greatest achievement in British intelligence history. Churchill described the men and women at the Victorian mansion in Buckinghamshire, who cracked the German's Enigma cipher, as "the geese who laid the golden eggs and never cackled". Their genius at deciphering the Nazi's Ultra intelligence was recognised in Robert Harris's best-selling novel Enigma and inspired the blockbuster Kate Winslet movie.

For 60 years the codebreakers at Bletchley Park have been credited with the greatest achievement in British intelligence history. Churchill described the men and women at the Victorian mansion in Buckinghamshire, who cracked the German's Enigma cipher, as "the geese who laid the golden eggs and never cackled". Their genius at deciphering the Nazi's Ultra intelligence was recognised in Robert Harris's best-selling novel Enigma and inspired the blockbuster Kate Winslet movie.

Now it can be revealed that a catastrophic breakdown of communications between Bletchley Park and the Admiralty enabled the Germans to read the Allies' trans-Atlantic messages for 10 months at the height of the Battle of the Atlantic, putting thousands of lives at risk.

The Americans warned Rear Admiral John Godfrey, the head of Naval Intelligence, in 1941 that British codes were insecure. By August 1942 Bletchley had discovered that Naval Cipher 3, which was set aside for Anglo-American use, had been penetrated. But the Admiralty did not change the cipher until the following June, leading to thousands of deaths at sea. Meanwhile Admiral Karl Dönitz, commander of Germany's U-boat fleet, was worried about Enigma's security and changed the Nazi codes, hampering Britain's own intelligence.

Naval Cipher 3 was introduced in October 1941 but was broken by the Germans the following March. Two months later, on 12 May 1942, they sank seven merchant ships on the Atlantic convoy ONS 92, which was heading to Halifax, Nova Scotia.

By 1 November 1942, when convoy SC 107 came under attack, Bletchley Park had already discovered that the Germans had cracked the codes but the Admiralty had yet to change them. But it was in March 1943 that the breaking of Naval Cipher 3 proved its most catastrophic as Allied losses amounted to 120 ships, the fifth highest monthly loss in the war.

The revelations are broadcast in the BBC2 series The Battle of the Atlantic, screened tonight. Ralph Erskine, editor of the authoritative book on codebreaking at Bletchley, Action This Day, said: "The people who were experts in codes and ciphers were at Bletchley Park. They have to take some responsibility. They ought to have banged the drum more.

"[The British military] found out in August 1942 that the Germans had broken into Naval Cipher 3 but it just took an age to get it changed. The Admiralty knew it was vulnerable but was unable to rush something into production and distribute it. Logistics was a very big part of it, plus poor organisation and divided responsibility. It shouldn't have been about money. It was just a printing job to change the codes. Compared to the cost of a ship that's buttons."

The Admiralty's Operational Intelligence Centre was based in the Citadel, hidden by London's elegant public buildings on the corner of Horseguards Parade, just yards from Trafalgar Square. In a bunker, 20 feet below ground level, was the Submarine Tracking Room where naval intelligence was compiled against the enemy.

Until 1941 the Royal Navy was losing its battle for survival. In the first 18 months of the war the Germans sank more than 1,500 ships. However, in spring 1941, an Enigma machine and cipher books were recovered from the captured U-boat U-110 and two ships, Krebs and München, leading to a change in fortune for British intelligence. The haul was delivered to Bletchley Park, or Station X, where cryptographers worked night and day to crack the daily wheel settings.

By July that year, a flood of decrypted signals was flowing down the secure teleprinter lines from Bletchley to the Admiralty and the German hit rate had dropped from 58 ships to 17. Beneath a portrait of Admiral Dönitz, Commander Rodger Winn, a former barrister, compiled U-boat situation reports based on intelligence from Bletchley Park.

However, the flood of intelligence was to last just six months. By February 1942 the Germans had added a fourth wheel to the machine and changed to a new cipher, Shark. And in March the Germans managed to crack Naval Cipher 3, which they dubbed the Convoy Cipher.

The breach in British intelligence was not discovered for five months, even though the Admiralty's Operational Intelligence Centre had set up a special division to protect the security of British naval ciphers. Its 10 staff were totally reliant on Bletchley Park for their expertise yet Bletchley assigned only two people to the task, one the head of GCCS, Commander Edward Travis, who had little spare time for the role. It took the two codebreakers five months to discover that the Germans had cracked Cipher 3. Even then it was not changed until June 1943.

The delay cost lives. At its worst 80 per cent of the messages were read by the Germans, who sank a staggering 1,100 ships in the Atlantic in 1942, causing 10,000 deaths and forcing 30,000 seamen into lifeboats.

A secret report written for the Admiralty after the war warned that the intelligence failure would have to be rectified "if disaster in a future war was to be avoided". The document, written by Commander Tighe of the Admiralty's Signals Division, was considered so "disturbing" that only three copies were ever made. A digest of the report by RT Barrett, stated: "Minor economies in this detail of code and cipher security not only cost us dearly in men and ships but very nearly lost us the war."

Mavis Batey, a Bletchley worker, said that there could have been a breakdown in communication between the codebreakers and administrators which delayed changing the cipher. "It's so much about personalities," she said. "The people who understood what to do and the people who were putting it over were on different wavelengths. The codebreakers were down-to-earth mathematicians and didn't talk the same language as the administrators, who probably didn't understand what they were saying."

But Sarah Baring, 82, who worked at Bletchley before being transferred to the Admiralty's Operational Intelligence Centre, laid the blame at the door of the Admiralty. "We all admired Commander Travis very much," she said. "I think it would have been out of character for him not to have picked up the telephone and talked to the First Sea Lord, with whom he had direct access.

"I am not defending Bletchley just because I worked there. But in my experience this was very unlikely, whereas the Admiralty was a shambles at first. The admirals really didn't want to believe any information we told them. They found it very, very difficult to accept Ultra because we couldn't tell them where or how we got the information. They didn't care for that very much."

Günther Hessler, Admiral Dönitz's son-in-law and first staff officer at U-boat Command, revealed what he called the "game of chess" played before the British cipher was changed in June 1943.

In his official History of the U-boat War, published by the Admiralty, he wrote: "We had reached a stage when it took one or two days to decrypt the British radio messages. On occasions only a few hours were required. We could sometimes deduce when and how they would take advantage of the gaps in our U-boat dispositions. Our function was to close those gaps just before the convoys were due."

Captain Raymond Dreyer, deputy staff signals officer at Western Approaches, the British HQ for the Battle of the Atlantic in Liverpool, found out the extent to which the codes had been broken only after the war. "Some of their most successful U-boat pack attacks on our convoys were based on information obtained by breaking our ciphers," he said.