The report written in June 1968 included details of an initial plan to drop several 10- to 15-kiloton nuclear bombs on Chinese airfields in Amoy, now known as Xiamen, in the event of a Chinese blockade against islands controlled by Taiwan.
"This was in accordance with the drift of Air Force thinking which considered nuclear weapons as usable as 'iron bombs'," said the documents released by the US National Security Archive on Wednesday.
The report said an important lesson from the crisis was that "armed forces must expect civil authority to impose tight controls on them in times of emergency".
Bernard Nalty, an Air Force historian at the time who prepared a report on the crisis in June 1968, said Eisenhower's instructions to use conventional bombs astounded the top brass of the US Air Force.
"If there was a real war who knows what would have happened"
William Burr, National Security Archive analyst
But policymakers saw the "inherent disadvantages" of atomic strikes that posed the risk of radioactive fallout in the region, said the document.
Nalty wrote that the White House changed the ground rules because it knew that nuclear fallout would cause civilian casualties both in China and on Taiwanese territory.
Eisenhower "ordered the Air Force and Navy to prepare for conventional strikes as a show of determination," Nalty wrote, but "if the conflict escalated, nuclear strikes could have followed".
"Of course, if there was a real war who knows what would have happened. But there wasn't, fortunately," William Burr, a senior analyst at the Archive, told AFP.
The release of the papers coincided with comments from the current head of the US Central Intelligence Agency, describing China's current military build-up as "troubling" and a risk to US forces and interests in Asia.
In a speech in the US state of Kansas on Wednesday Michael Hayden said China's rapid military build-up "reinforces long-held concerns about Chinese intentions towards Taiwan".
He added: "But even without that issue, we assess the build-up would continue - albeit one that might look somewhat different."
According to a Pentagon report this year China has boosted total military spending in 2007 to more than twice its declared budget, claims Beijing has dismissed as an exaggeration.
Taiwan and China split in 1949 at the end of a civil war, but Beijing still sees the island as part of its territory awaiting reunification, by force if necessary.
The US is obliged by law to offer Taiwan a means of self-defence if its security is threatened.
The US is also the main arms supplier to the island despite switching diplomatic recognition from Taipei to Beijing in 1979.