A novel phosphorous‐nitrogen intumescent flame retardant with reactive diamino groups, benzoguanamine spirocyclic pentaerythritol bisphosphonate (BSPB), was synthesized and used as a chain extender, and then a series of flame retardant waterborne polyurethanes (FRWPU) were prepared by covalently conjugating the BSPB into waterborne polyurethane (WPU) backbone. Their structures were characterized by Fourier transformed infrared spectrometry (FTIR), 1 H and 31 P nuclear magnetic resonances (NMR), respectively. Simultaneously, the flame retardancy and the thermal stability of FRWPU were systematically investigated by limiting oxygen index (LOI) test, UL‐94 vertical burning test and thermogravimetric analysis (TGA). The results indicated that with the increase of BSPB content from 0 to 8 wt%, the LOI value of FRWPU increased from 18.6 to 27.3%, showing significant improvement by 8.7%. Compared with WPU, FRWPU showed decreased thermal stability but promoted char residue ratio. Conjugation of BSPB could obviously enhance the mechanical properties of FRWPU, the Young's modulus and tensile strength dramatically increased with the increase of BSPB. Investigation of char forming mechanism of BSPB through real time Fourier transform infrared spectra (RTFTIR) and scanning electronic microscopy (SEM) revealed that the polyphosphoric acid and phosphorus oxynitrides rich outer intumescent char layer could form protective shields to inhibit effectively internal polyurethane to heat and flame diffusion during contacting fire. POLYM. COMPOS., 38:452–462, 2017. © 2015 Society of Plastics Engineers