The Threat of Peace in Wartime London : TEN DAYS TO DESTINY, <i> By John Costello,</i> William Morrow, $23; 486 pages

Fiction lovers eagerly awaiting John le Carre’s next tale of British espionage would do just as well reading this revealing work about the real thing: the secret story behind the abortive peace feelers that swirled over London in 1940 and 1941 after the fall of France in World War II.

The story climaxes with Nazi leader Rudolf Hess’ sensational, out-of-the-blue flight to Britain on a May evening in 1941, where he offered supposedly generous terms for peace with England that would have allowed Hitler to concentrate on attacking Josef Stalin and Communism. In “Ten Days to Destiny,” Costello has uncovered enough surprises in buried raw material on the diplomatic, political and secret-agent activities during these two decisive years to feed espionage writers with plot ideas to the end of the decade.

The broad outlines are well known but the details are new. When Winston Churchill took over as prime minister in 1940 as the Battle of France began, he brought in the Labor Party to form a national coalition government. But he also retained his predecessor, Neville Chamberlain, and some of the Conservative Party’s arch-appeasers of the 1930s, including Foreign Secretary Lord Halifax and his deputy, R. A. Butler.

Churchill, of course, was utterly determined to fight on until Hitler was defeated, however impossible that seemed at the time, but the appeasers inside and outside his coalition government were like termites under the foundation.

From Berlin, Hitler and the Germans began throwing out all kinds of hints about a “generous peace” with England, and some of the appeasers certainly were prepared to give Hitler a free hand in Europe if Britain could retain its empire. A secret game began.

Churchill relentlessly and vigorously swatted down in public and private, by every diplomatic and propaganda means at his disposal, any and every floating peace rumor he could detect in those days, but still they kept buzzing behind his back, subsiding only after Hitler’s attack on the Soviet Union.

For example, while Churchill thundered in the House of Commons about fighting on the beaches, in the streets, in the hills and never surrendering, at the Foreign Office Halifax’s deputy, Butler, was talking obliquely to the Swedish ambassador about “a policy of common sense, not bravado.” This was promptly transmitted to Stockholm and passed on by the Swedes to Berlin to be communicated to the Germans as an indication of England’s willingness to discuss peace terms whatever Churchill was saying in public.

This is only one of a myriad of intriguing insights into the “peace effort” that Costello has chased down in records and interviews in London, Washington, Stockholm, Bern, Bonn, The Hague, the Vatican, Madrid--even in Moscow, where, to his surprise and delight, important and sensitive KGB records were opened up under perestroika freedom of information.

Particularly revealing is how the British spied on the American Embassy in London, and on the appeasement-minded American ambassador, Joseph P. Kennedy, as well as his sons, Joseph and future President John.

The British uncovered a spy in the embassy code room, Tyler Kent, but withheld their discovery from the Americans for some months to time the revelation to do maximum damage to Kennedy’s reputation and standing in Washington. In reconstructing all this, Costello even managed to locate and interview an aging and unrepentant Tyler Kent in retirement in Arizona.

In his effort to play the revisionist historian, however, Costello overestimates the historical importance of the intrigues and espionage he has uncovered. Fascinating as they are, they never posed a serious threat to Churchill’s hold on power or determination to fight on.

Once Churchill took office, the appeasers were never as important as the Germans thought. The bizarre flight of Hess to seek a peace intermediary in the person of the dotty Duke of Hamilton was, in Churchill’s comment, “an encouraging sign of the ineptitude of the German intelligence service.”

But it is Costello’s most sensational contention that Hess was in fact encouraged to make his flight to London by British intelligence, which, unbeknown to Churchill, passed secret hints to Berlin on behalf of the appeasers that a peace deal could be struck and Churchill dislodged.

In the KGB records that Costello obtained, he discovered that the Soviet superspy in the British Intelligence Service, Kim Philby, first flashed the news to Moscow of Hess’ flight to England. Costello then found two subsequent reports to the KGB that Hess had been “set up” by the British to make his flight to discuss a serious peace deal. One of these reports came from the Czechoslovak military attache in London who kept in close contact with his Soviet opposite. The second report came from a Soviet agent (presumably a French Philby?) on the general staff of the defeated French Army at Vichy.

However, apparently there is nothing further in the KGB files on the subject from Kim Philby. Yet he was by far the best-placed insider to know if the Hess defection was orchestrated by his colleagues in MI-6. Did they manage to keep the secret from him? Did he know about it but not report it to Moscow? Or was the story simply a phony that never happened? Did the KGB’s Vichy and Czech informants get it wrong? Has Costello got it wrong? Read this mystery and much more in Costello’s real-life thriller and draw your own conclusions.

Next: Jonathan Kirsch reviews “Money and the Meaning of Life” by Jacob Needleman (Doubleday).