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London - The last Nazi medals of the Second World War were awarded to German spies in London by an MI5 agent who tricked them into believing he was a Gestapo boss.

The military honours were bestowed on the two agents – both British citizens – to keep them ‘on side’ after they were fooled into thinking they were secretly sending intelligence to Hitler.

In fact, MI5 knew who they were and all their secrets ended up in British hands.

In a further twist, the medals are believed to have been forged at the Royal Mint at the request of one of Britain’s most prominent Jews, Victor Rothschild.

The story is revealed in a new book, Agent Jack, which tells the story of Eric Roberts, a bank clerk and father-of-three who lived in the Surrey suburbs. Author Robert Hutton reveals how he became an MI5 officer during the war and masqueraded as a Gestapo boss called ‘Jack King’.

The existence of Agent Jack was first revealed in 2014 with the release of secret MI5 files at the National Archives. He ran a network of nearly 500 German spies in Britain who thought they were working for Hitler when, in fact, all the information they passed to Agent Jack stayed with MI5.

However, it can now be revealed that to keep its two star agents on side after Germany lost the war, MI5 secretly awarded the pair what are believed to be the last Nazi service medals.

Marita Perigoe and Hans Kohout were at the heart of an inner circle of spies loyal to their boss.

Perigoe, said to be of mixed Swedish and German origin, was a fascist who helped Agent Jack build the network and had also stolen design secrets from Rolls-Royce, makers of the Merlin engine that powered the Spitfire.

Kohout was born in Austria but moved to Britain in 1929, taking citizenship in 1936.

An expert in aluminium foil manufacture, he passed Agent Jack secrets including details of the Mosquito plane and technology used to fool German radar.

"Kohout was arguably Germany’s most effective spy in Britain during the war," Mr Hutton wrote. "His tragedy is that none of his reports went further than MI5 headquarters."

At the end of the war, MI5 decided not to prosecute any of its so-called "fifth column", partly because it did not want the Home Office to find out about the controversial operation.

It believed the top pair might be useful sources on fascist movements and decided to award them medals to keep them engaged.

The operation was the brainchild of Mr Rothschild, the banking heir and scientist, who joined MI5 in 1940. He asked his assistant to get hold of German medals and requested the Royal Mint, which his family owned, to make copies.

The book reveals a secret ceremony in London in January 1946 at which Agent Jack presented Perigoe and Kohout with a bronze Kriegsverdienstkreuz Second Class – the German medal for non-combat gallantry.

MI5 noted that the pair were "extremely gratified".

"There were quite a few of these medals around," Mr Hutton wrote. "So it’s quite possible they were given genuine ones.

"But the records do suggest that having spent the war as fake German spies, Perigoe and Kohout finished it receiving Nazi medals that were forged by the world’s most famous Jewish bank."

Kohout’s son Ernest still owns his medal, which his father told him he had received for long service on the Austrian railway.

Agent Jack: The True Story of MI5’s Secret Nazi Hunter by Robert Hutton is published by W&N.