I have started exploring Markarth and I decided it might be nice to visit the Jarl but as soon as I step up towards his throne I am attacked by two Thalmor and then almost immediately by the guards, onlookers and the Jarl himself.

Why, I have no bounty in the reach.

The only thalmor I have come across were during the college of Winterhold quests and at the embassy during Diplomatic Immunity so why are they attacking?

Perhaps you stole something by accident. Check your inventory.

There are things you can wear that will cause the NPC's to be hostile towards you just by getting too close to them. I'm being as generic as I can so as not to spoil anything for anyone. Dunno if that may be the cause, but it's one thing that could cause it.

I certainly have not stolen anything, my character is goody goody enough to be a paladin.

I am wearing armor from a certain faction would that have an affect as it seems it hasn't anywhere else?

I don't think so. I was referring to a certain very rare mail that when warn causes damage to NPC's near you. Which, of course, will make them unhappy.

No I was wearing Blades armour, just tried again without it and it is fine.

Quite strange, never heard of such a thing... sorry for the dumb question, but are you sure you′re not a stage 4 vampire ? It′s the only reason I can think of for NPCs attacking out of the blue

I don't think it's supposed to happen, but try taking off teh blades armor anyway. Lorewise the Thalmor are hunting down and killing all the Blades.

lol the Thalmor said "Blade! Kill 'em!"

On a serious note: Why the HELL do the Thalmor react to Blade gear, but no one else reacts to any other faction gear?!? You can run around Windhelm and carry on a conversation with Ulfric while wearing Imperial Armor, but Thalmor attack on sight if you wear Blades armour? BS

I think so of the faction interactions work right now and some dont, Like the Vigil of stendar are totally broken as they will attack vamps and werewolves on site but leave the deadrc worshipers flashing all that daedric gear alone go figure