The issue of how to deal with the unwanted off-spring of the controversial affairs divided the country towards the end of the Second World War and exposed the racial prejudices of the time.
It was considered so serious that there were dire warnings it could harm Anglo-American relations and the Government was urged to treat the children as "war casualties".
The problem began to emerge in 1944, when increasing numbers of US servicemen were stationed around Britain.
Many of the women they fathered children with were wives of British soldiers fighting abroad.
The documents suggest that where the baby was white it was often possible for husband and wife to be reconciled and keep the child. However, this was rarely possible when the child was mixed race.
At a conference on the matter in December 1944 John Carter, of the League of Coloured Peoples, said: "In several cases they are married women whose husbands are in the army, usually overseas, and they usually get letters from their husbands saying 'Well, I am very sorry to hear about it. If you can get the child adopted everything will be all right.'
"Then there is the unmarried mother who would have prospects of marriage if she could get rid of the child and I think the question is whether or not a Home ought to be provided for these children in some part of the country."
Some wanted the children raised in homes alongside white children, a few said they should be brought up with other black children to avoid racism, and many called on them to be sent to America to be nearer their fathers.
Speaking at the same conference a Miss Steel, general secretary of the Church of England Moral Welfare Council, said: "The suggestion that they should be shipped back to America is terribly cruel, even if it were possible. Their mothers are the people to whom they are linked most closely, and it would add to their sense of being unwanted, not only that their mothers had given them up but the country where they were born had given them up too."
Miss Steel said the war babies should be given places in local authority and voluntary sector homes to solve the problem of finding foster parents.
"In rural areas and small towns …(social) workers found it difficult enough to find foster mothers for any children, and impossible to find for the coloured child …I know of an evacuated family where the father was a coloured man and every visitor to that village was shown the child as an object of local interest."
The files, released today by the Public Records Office in Kew, include a letter from a Miss O. Clarke to her MP suggesting the babies be placed in West Indies mission schools.
However, a Whitehall official wrote to the MP in July 1944: "The proposed solution is high handed and - if confined to coloured illegitimates - has a Herrenrasse (master race) flavour not now popular."
By the end of the war pressure was mounting on the Government to take action.
In letters to the Ministry of Health in December 1945 and March 1946 Harold Moody, founder of the League of Coloured Peoples, said Britain and the US must treat each baby as a "war casualty" and warned: "Our anxiety is to forestall a social problem which might not only affect the life of this country but which might also affect Anglo-American relations."
In response Aneurin Bevan, health minister, said his policy was to encourage mothers to keep their children, or failing that to tackle the shortage of places in homes.
The Home Office, however, differed and one official wrote: "Provided it is clear that the mother does not want the child and there is a reasonably satisfactory home in the US the child will have a far better chance if sent at an early age to the US than if it brought up in this country."