His decision triggered a wave of renewed anti-American feeling, protests and, cabinet documents reveal, a carefully planned backdown by the Labor government.
In 1981 the Fraser government had told the Americans it was fine for them to carry out the tests but, probably not wanting to startle the Tasmanians, Malcolm Fraser's team neglected to tell anyone about this undertaking.
In the words of National Archives historian Jim Stokes: "It had been intended to announce the plan in 1982 but political considerations caused the announcement to be postponed."
Then Mr Hawke became prime minister and, during a visit to Washington, the planned missile test was discussed. He confirmed it could go ahead.
But the prime minister underestimated the level of public concern there would be about the prospect of the US firing missiles into the ocean near Australia, albeit without nuclear warheads.
According to Dr Stokes, the MX missile issue was one of those political upheavals that showed the government was not always in full control of the agenda.
"It was a sensitive issue in Australia at a time when there was substantial opposition in Australia to both uranium mining and the nuclear arms race," Dr Stokes said.
In April 1984, 250,000 people took part in peace marches in capital cities. Four female protesters were blasted with high-pressure hoses when they tried to paint the words "death ship" on the side of the visiting American warship USS Cushing.
The Nuclear Disarmament Party won more than 7 per cent of the vote in the 1984 election, though, Dr Stokes recalls, it soon began to disintegrate.
One party candidate was rock singer Peter Garrett, now a federal Labor minister, who polled strongly but was not elected.
In April 1985 Mr Garrett was one of many NDP figures who resigned from the party, claiming it had been taken over by Trotskyists.
But the party won a Senate seat at the following election.
It was not until 1985 that the MX missile test issue was discussed by cabinet.
By then it was feeding public concerns about US military visits, the future of the ANZUS alliance and the US presence in bases on Australian soil going back to the "faceless men" controversy over the Exmouth naval communications base in the 1960s.
The documents include a cabinet decision to announce that when the government was elected it was confronted with an undertaking already made to the Americans and it had decided to honour that commitment.
It said the test splashdown zone would be moved out of Australia's exclusive economic zone and into international waters.
But the government triggered more public controversy when it announced US aircraft monitoring the test would be allowed to land in Australia.
Then came another backflip when Mr Hawke told a media conference he had underestimated the strength of feeling about the issue.
Two days later the Americans announced they would conduct the tests without the use of Australian support facilities.
The Americans were not pleased and The Washington Post editorialised that in backing out of its commitment to help monitor the MX missile tests Australia had indicated it had caught the same "nuclear allergy" as New Zealand, which had just banned visits by nuclear-powered or armed ships.
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