It was a pivotal moment in Britain's First World War effort which set the nation on a course to victory at sea. On the morning of June 23, 1915, the first German U-boat was lured by a covert Q-ship — a decoy trawler — and was then promptly sunk by a British submarine lurking below.

For almost 100 years since, the U-40 has lain in the depths of the North Sea, miles from where it was recorded as going down. Now, a father and son diving team has identified the wreck and it has been declared a war grave by the German authorities.

The U-40 was sunk by the British submarine HMS C-24, which was hiding beneath the decoy trawler Taranaki on a towline. When given the signal, the submarine surfaced suddenly and, despite becoming tangled in the cable, scored a direct hit with a single torpedo. Of the 32 on board, only the commander, Gerhardt Furbringer, and two others escaped. The other 29 perished.

The sinking prompted the Germans to accuse the British of "dirty tricks", but signalled the beginning of a campaign which helped ease the pressure on ships bringing food and supplies to Britain. It was the first in a series of attacks by the so-called Q-ships. The captain of the submarine was awarded the Distinguished Service Cross for his part in the attack.

Iain Easingwood, who runs diving firm Marine Quest with his father, Jim, said he was delighted to have solved the mystery of the whereabouts of the U-40. The 33-year-old skipper led a team of divers out of Eyemouth earlier this month.

He said the sunken vessel, which lies 210ft beneath the sea, 40 miles off the coast of Eyemouth, remained in good condition, and even had its attack periscope still raised.

"She was torpedoed by a British submarine, so there's quite a lot of damage to the stern, and she's been there for a hundred years or so," he said. "But these things stay in pretty good nick because there's a pressure hull within the outer skin that you see, and those withstand pretty much anything, so they'll be down there forever, basically.

"The periscope's still up, with the glass lens still in it. Some of the stuff is still in really good condition, although obviously it's very dark down there."

Marine Quest discovered the wreck using hydrographic sonar and ships in December and then took measurements and photographs to confirm the boat's identity. Previous reports had suggested it was lying close to Girdle Ness, near Aberdeen. They waited until last week to venture out with divers in perfect weather conditions in their boat Silver Sky.

Mr Easingwood Jr said: "It's one thing finding these U-boats but it's another thing to identify them, so the divers go to huge lengths to get it right before we release any information. Because, especially for the families of the people on board these ships, it's really important that we don't wrongly identify them."

He said the divers had a strict policy to touch nothing on the wreck. They had previously found another u-boat, about four miles off the coast, and the commander's son came to lay a wreath. "It was nice to be able to do something like that for someone," he said. "It meant so much to him, and it made me realise these wrecks are graves and have to be respected as that. Somebody's great grandfather's down there so you don't want to be doing anything underhand and picking things off it."

The 200ft U-40 is also significant because it was the first submarine to have an aeroplane carried on its deck. The concept was soon disregarded by German naval chiefs as a failure. "Given the history and amazing story behind the U-40, this is probably our most significant find to date," said Mr Easingwood jnr. "There are so many other wrecks out there in the North Sea and we will be on the lookout for another exciting find."

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