In 1985 Lord Hill-Norton wrote to Michael Heseltine about the "Rendlesham incident" in 1980, when US airmen in Suffolk said they saw strange lights.
He said an unauthorised aircraft may have entered and left UK airspace.
In 2003, an ex-US security policeman said he and another airman had shone patrol car lights as a prank.
The case 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".
Lord Hill-Norton's letter said either a craft had entered UK airspace with impunity or US airmen were capable of a "serious misperception".
But 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.
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