In April 2002, a few days after the death of Queen Elizabeth the Queen Mother, her crown was taken from behind its high-security armoured glass in the Tower of London and carried in open view through the streets of London, surmounting her coffin as it processed from St James's Palace to Westminster Hall. It remained there during her lying-in-state as members of the public filed past to pay their last respects to the last Empress of India.

Interestingly enough, she had only ever worn this crown once, sixty-five years earlier, at the coronation of her husband, King George VI, in 1937. The largest and most important jewel in this crown is the priceless Kohinoor, a 105 carat diamond that was once the largest known diamond in the world. It originated at Golconda in the state of Andhra Pradesh in India, belonged to various Indian and Persian rulers who fought bitterly over it at various points in history, and seized as a spoil of war, was finally taken by the British and became part of the British Crown Jewels when British Prime Minister Benjamin Disraeli proclaimed Queen Victoria Empress of India in 1877.

The original name of the diamond was Samantik Mani meaning “Prince and leader among diamonds.” In 1739, Nadir Shah, the King of Persia, invaded India and was said to refer to the diamond as the "Mountain of Light". The Persian-Arabic words for "Mountain of Light" were Koh-i-Noor. The magnificence of the diamond and its value symbolised the power of an Empire. It was said that "He who owns this diamond will own the world, but will also know all its misfortunes. Only God, or a woman, can wear it with impunity."

The British public were given a chance to see the Kohinoor when the Great Exhibition was staged in Hyde Park in 1851. The correspondent of The Times reported:

The Kohinoor is at present decidedly the lion of the exhibition. A mysterious interest appears to be attached to it, and now that so many precautions have been restored to, and so much difficulty attends its inspection, the crowd is enormously enhanced, and the policemen at either end of the covered entrance have much trouble in restraining the struggling and impatient multitude. For some hours yesterday there were never less than a couple of hundred persons waiting their turn of admission, and yet, after all, the diamond does not satisfy. Either from the imperfect cutting or the difficulty of placing the lights advantageously, or the immovability of the stone itself, which should be made to revolve on its axis, few catch any of the brilliant rays it reflects when viewed at a particular angle.

This disappointment in the appearance of the stone was shared by many. In 1852, under the personal supervision of Prince Albert, the diamond was cut from 186 carats to its current 105 carats to increase its brilliance. Albert consulted widely, took enormous pains, and spent some thirty-eight days and £8,000 on the operation, which reduced the weight of the stone by a huge forty-two percent - but nevertheless Albert was still dissatisfied with the result. The stone was mounted in a tiara with more than two thousand other diamonds.

Later the stone was to be used as the centrepiece of the crown of the Queens consort of the United Kingdom. Queen Alexandra was the first to use the stone, followed by Queen Mary. Finally, in 1936, the stone was set into the crown of the Queen Mother.

In 1976, the British government became exercised over whether the UK's ownership of the ancient stone was entirely legal after Pakistan, out of the blue, requested its return. Documents released to the National Archives show how that request was taken seriously by the Callaghan government. Teams of civil servants were asked to make sure that Britain could say that its ownership of the diamond was fair. According to the archives, the then Pakistan prime minister Zulfiqar Ali Bhutto wrote to Jim Callaghan asking politely for the diamond's return.

Mr Bhutto said there was a "sense of cultural deprivation or historical disinheritance" caused by Britain hanging on to precious objects collected around the British Empire. "There is one object of great and vital historical interest, the Kohinoor diamond, which was taken to London in 1849 from no other place than Lahore, Pakistan's cultural capital. The object is financially inconsequential for Britain by contemporary standards but its long history lends to it immense sentimental value for Pakistan. Its return to Pakistan would be a convincing demonstration of the spirit that moved Britain voluntarily to shed its imperial encumbrances and lead the process of decolonisation."

There was a slight problem with Pakistan's request - it was not the only country with a claim to the diamond. Over the course of 500 years the legendary diamond had passed from India to Persia - and then on to Afghanistan before returning to India and the treasury of Lahore. But the papers reveal the Callaghan government took the request seriously and sent officials to investigate its ownership - albeit in as low-key a way as possible. Documents in the Foreign Office library were searched, government lawyers instructed and soundings taken from embassies. Diplomats in the countries likely to counter Pakistan's claim were cabled and told to do as much as possible to kill the story. The prime minister consulted the Queen. However, her exact reply is not known as a note from Martin Charteris, her private secretary, to the PM remains secret. But one Foreign Official, CO Hunt, was rather annoyed at all the time and energy being expended on the issue.

"I can work up no enthusiasm whatsoever about the historical legal minutiae... nor do I think we need to," he said. "The stark facts are these: we have the Kohinoor diamond, whether or not our possession of it is legally justified. We have made it clear that we are keeping the diamond, adducing the best arguments to support our contention."

In other words - tough luck. The prime minister replied to Mr Bhutto with a polite "No".