Sixty-one years ago a U-boat slipped out of the Baltic port of Kiel, sent by Hitler on a secret voyage to Japan in a mission to avert Germany’s looming defeat.

U864 never reached her destination. She was sunk by the British in the only known case of one submarine destroying another while both were submerged. It is a remarkable tale of wartime derring-do — but one with a sting in the tail.

The wreck now lies, in two pieces, 152 metres (500ft) beneath North Sea waters off the Norwegian coast, and contains 65 tonnes of mercury in 1,857 corroding canisters. It is a toxic timebomb, and today the Norwegian Government will announce plans to entomb it in a sarcophagus 12 metres thick.

“The potential for pollution is unlike anything we have seen in Norwegian history,” said Ane Eide Kjaeras, spokeswoman for the Norwegian Coastal Administration.

The mercury, which was used in weapons production, was U864’s secondary cargo. Her most important load when she left Kiel on her maiden voyage on December 5, 1944, was made up of advanced Messerschmitt jet engine parts, for use in Japanese aircraft.

Hitler apparently believed that if Japan could regain air superiority in the Pacific the United States would have to divert resources from Europe.

British codebreakers at Bletchley Park learnt of Operation Caesar in time, and the Allies dispatched HMS Venturer, a V-Class submarine commanded by Lieutenant Jimmy S. Launders, 25, from the Shetland Islands to intercept U864 as she headed south from Bergen.

Venturer could not use sonic waves to hunt her quarry for fear of betraying her own position and U864, commanded by Captain Ralf-Reimar Wolfram, was able to slip past, only to suffer serious engine trouble later.

Shortly after 9am on February 9, 1945, Venturer detected U864’s engine noise using hydrophones and then spotted her periscope.

The hunt was on.

“We felt a bit shaky because it could sink us the same as we could sink them,” Harry Plummer, an able seaman on Venturer, told a forthcoming BBC Timewatch documentary on the subject.

For three hours Venturer stalked the 87-metre U864 as the German submarine zig- zagged to make herself a harder target. Then Launders gambled, deciding to fire all four of Venturer’s torpedoes even though this would leave her defenceless if they missed.

He calculated U864’s course as best he could, then fired at 17 second intervals. Each torpedo took more than two minutes to reach its target. The first three missed but the fourth broke U864 in half. There was a “loud, sharp explosion followed by breaking-up noises”, Launders wrote in the ship’s log at 12.14pm. Mr Plummer said that it sounded like someone crushing a box of matches.

“It was a relief,” he recalled. But “the next minute we realised it was another submarine and more submariners had been killed . . . When you reflected afterwards you think to yourself, ‘Poor bastards’.”

U864 lay undisturbed on the sea bed, about two kilometres off the island of Fedje, until discovered by the Norwegian Navy in 2003. Underwater pictures show the ghostly wreck covered in seaweed, her bow and stern lying 40 metres apart, her rudder locked in an emergency dive position.

What alarmed the Norwegian authorities were the dangerous levels of mercury contamination on the surrounding seabed, and the discovery of documents indicating that U864 had 65 tonnes of mercury on board. Traces of mercury were also found in fish, raising fears that the cargo could contaminate the food chain.

The Norwegian Coastal Administration monitors about 2,500 wrecks, 400 of them from the Second World War, but this is the most threatening, Gunnar Guellan, the project manager for U864, said. Fishing and boating in the immediate area have been banned and islanders have been told not to eat local seafood. Attempts to dig into the half-buried keel using robotic vehicles were abandoned when the unstable wreck shifted.

The Norwegian Coastal Administration has dug up near the keel a single mercury canister. Its 5mm-thick steel wall has been eroded in places to less than a millimetre. The administration can only guess at the condition of the other canisters still inside the wreck.

The islanders want the wreck to be removed altogether, but authorities deem that too dangerous — the wreck, which still contains torpedoes, could break up and the canisters might disintegrate.

Entombment is the only option. The wreck will be covered with up to 100,000 cubic metres of sand and gravel, or possibly even concrete, to a depth of 12 metres because the seabed there is unstable. The cost could exceed £8 million.

Entombment would also be an appropriate way to deal with what is, after all, a war grave. Somewhere in that broken U-boat lie the remains of Captain Wolfram and his crew of 72.

• The Hunt for U864 will be broadcast on BBC Two on January 5 at 9pm. Visit bbc.co.uk/timewatch for more details.