Authors notes:

In Thor 1, Loki was told by Odin that he was adopted, a foundling.

At the end of the war with the Jotun, Odin goes into a temple (for no apparent reason) and finds a tiny baby and picks it up. The baby changes from Jotun blue to Asgardian white (again, for no apparent reason), and Odin takes him back to Asgard to bring him up as his own son, and keeps the child's parentage to himself.

When Loki finds out he's different to all the rest of the Asgardians and confronts Odin about it, Odin tells him he's Laufey's son, who was left to die of exposure for being too small, and so Odin took him because he might be used to forge an alliance in the future.

Now, some of the problems (and there are several) that I have with this are as follows:

Odin has already proven himself to be ruthless by banishing his full blood son Thor to exile on a foreign world with no powers, or help to protect him. Odin's wife Frigga even tells him it's almost certain death, but he still refuses to relent. So why would such a ruthless man adopt the child of his enemy and bring him up as his own? How could he imagine that his enemy would accept his own abandoned child as a possibility for an alliance?

Thor and Loki both went to Jotunheim to confront Laufey. Neither of them had met Laufey before, yet while he was introducing himself Laufey interrupted Thor and told him who he was. He never once acknowledged Loki, though Loki is supposed to be his own son. Surely Laufey, knowing Thor to be Asgardian would know Loki is not? Especially after seeing another Asgardian burned by the touch of a Jotun during the ensuing battle, while Loki, rather than being burned actually starts to turn blue. Neither the Jotun, nor Laufey reacted to this, which surely should have happened if Laufey had had a son who had disappeared ("Hang on a minute – you're about the right age...")

Why would Odin go to a Jotun temple after the war was over; unless to meet with Laufey on sacrosanct land to discuss the terms of surrender? If that were the case, what would he have said to him? "Hey Laufey, can I have this?", "Yeah, sure. Why not – you won." Really?

Why would Loki change from Jotun to Asgard just because an Asgardian picked him up? It's been established that he learned his magics from Frigga. The Jotun powers are all to do with cold and ice – even before their artefact was taken by Odin, and while it's easy to say that Loki's not Asgardian because he's not a warrior like his brother Thor, you can hardly call the Jotun peaceful!

So I've decided to write some fan-fic to explain what might be the truth (and is hopefully more believable).

It takes place after the conversation at the end of Thor 2 between Loki (as Odin) and Thor in the Throne room:

A Letter to Loki

Loki took a moment to allow himself the luxury of being himself while he was alone, and smiled; "No brother," he said; "Thank you."

He reinstated his Odin disguise and left the Throne room, pleased with his conversation with Thor, and made his way to Odin's chambers. He had work to do now, and the first thing was to find out anything he could about what Odin was doing or planning to do. He had a charade to keep up and he needed to be as believable as possible.

As he approached Odin's chambers he realised the soldier on sentry duty was watching him oddly. He asked him; "What is it?"
The soldier looked abashed and mumbled something.
"Speak up man," Loki said sharply. "You have something to say. Say it!"
"Sorry sire," replied the soldier. Clearly frightened now; "but you seemed different. I didn't mean to offend."
Loki, annoyed at himself for being caught out so easily, glared at the terrified soldier and said; "I'm fine; get on with what you're supposed to be doing instead of watching me; and be glad I'm in a good mood, or I'll have you flogged for insubordination!" He stormed into his father's chambers and slammed the door behind him.

Loki paced back and forth wondering what it could be that was different enough to have the soldier notice. He checked himself in the mirror in the corner and realised he simply didn't walk like Odin. Odin, especially recently, had a much heavier, slower gait, and Loki walked like a young man. He made a mental note to work harder on it. It would not do for something so simple to mark him out. He must be Odin at all times; one slip could mean the end of everything. No more little luxuries, he must not let his emotions get the better of him. He must have total control at all times.

He looked around Odin's room – his now, at least for the time being – and considered his surroundings. The room was large and ostentatious, one whole wall a window looking out over the city to the Rainbow Bridge and the Bifrost. A large four-poster bed dominated the room with heavy drapes shot through with gold thread. Against one wall there was a table with drawers, next to a huge hearth with a mantle at head height. On the opposite wall was a divan between the full size mirror in the corner and a door leading to the dressing room.

Loki decided to start with the table. It had four drawers, two on each side. He opened the first drawer slowly and looked inside, feeling like a thief, knowing he was so much worse. Inside were some hard bound books and some letters; he scanned through them, placing those that looked useful on top of the table and returned the rest to the drawer. He opened the next one, expecting something similar, but instead he found his and Thor's childhood. All the gifts they had made for him, individually and together, with Frigga's help and without, were all here, in this drawer. Frigga had assured him time and again while he was a child that his father had treasured his gifts, and he never believed her, why should he? He never saw Odin with them after they had been given to him. Loki shed a silent tear. Finding out she wasn't his mother never changed his feelings for her, and he missed her abominably.

He closed the drawer quickly, trying unsuccessfully to shut out his grief, wishing he could shut off his emotions as easily as closing the drawer, and moved on to the next one. Sat on top of the contents was a letter with his name on it, written in Odin's hand. Loki took out the letter gingerly, wondering what Odin could have to say to him that he couldn't have said face to face. What was it he couldn't say out loud, that needed to be written down, and when had he planned to give it to him?

He looked around the room, as if checking to see if anyone was watching, and unsealed the letter. He took a deep breath and started to read:

Loki, my son.
And yes you are my son, though I've denied it to everyone, including myself for so long. I had hoped not to have the truth – or even the lie I told your mother – come out at all, but your mother was right, it would have come out sooner or later.
What I told you that night, about your parentage and how I found you was what I told your mother. She never knew the truth; I didn't want to shame her.
I lost my eye during the war with the Jotun. I remember the blow, it should have killed me, and I remember nothing after until I woke in a temple, being nursed by a jotun woman. I still don't know to this day how I got there. She nursed me back to health. She told me she was Laufey's wife, and she was a seer. She said that I must live to bring up my sons because they were destined to save the nine realms from destruction; and that I would have no more get with Frigga so I must sire my second son with her.
I was lonely, son. Frigga was a long way away, and I'd not felt the embrace of a woman for what seemed an age. She was beautiful, and willing, and there.

You were conceived that night in the temple. She sent me on my way the next morning, back to the war. I never saw her again. When the war was over just after I'd accepted Laufey's surrender, I received a message from one of her hand-maidens asking me to go back to the temple. We made the detour on the way back home, and when I entered, you were there, laid on the altar wrapped in cloth swaddling. A little blue bundle that turned pink in my hands, and I loved you from that moment.

When I brought you to Frigga, and told her the lie, she fell in love with you too, and I was glad I'd kept the truth from her. How could she love her husband's illegitimate child? How could anyone? It was difficult for me when you were growing up. You and Thor are my sons, and I was proud of you both equally, and even though you chose Frigga's magic over arms, I was still proud of you, but I had to be careful that Frigga didn't become suspicious, so I never showed you properly what you really meant to me.

I'm sorry son. Truly I am. When you came to me today and told me you were dead; Yes son. I know it was you, I realised I was too tired, too old to fight you. With Frigga gone, and the true Odinsleep so long overdue, I need to rest. Whatever your plan, whatever you do, I forgive you. Can you forgive me too?

My son, I love you,

Your Father,

Odin.

Loki looked up from the letter, tears flowing freely. A rush of emotions passed through him, finally settling on rage.

He wiped the tears from his face then tore up the letter and threw it into the hearth. He watched the fragments burn and said; "Father, you did a great disservice to mother. She would have loved me whatever my parentage. You've deceived us all, yet I am considered the father of lies! I hate you, with all my heart, and for all you've done and not done, I hate you for it!"

Loki breathed deeply for a few moments, then turned back to the table all emotion gone to carry on with his search.

FIN.