Blair set to reward allies in reshuffle

Tony Blair notched up 10 years as Labour leader today amid high expectations of an imminent Cabinet reshuffle and an EU promotion for his old ally Peter Mandelson.

The Prime Minister, on a high after escaping unscathed from the Commons debate on Iraq, was said to be keen to start reshaping the Government today, although officials said it may be postponed.

Insiders say Mr Mandelson, one of Mr Blair's closest supporters in the past decade, will be rewarded this week by being named as Britain's next European Commissioner.

Downing Street is expected to press for him to get a senior position at the Commission, covering an economic portfolio, once the new EC president is formally appointed.

The move would mean a remarkable second comeback for the former Cabinet minister who was twice forced to resign from the Government, first over a home loan from fellow minister Geoffrey Robinson and later in the Hinduja brothers passport furore.

To become a ?163,453-a-year commissioner, Mr Mandelson would have to resign his Hartlepool seat forcing a byelection for Labour. But party strategists believe it would be a straight Labour versus the Conservatives contest with little risk of a Lib-Dem breakthrough as happened in Leicester South last week.

Speculation was high that at least one Cabinet minister will be dropped in a reshuffle, with Work and Pensions Secretary Andrew Smith seen as the most likely casualty after he fell out with Chancellor Gordon Brown over pensions.

Ruth Kelly is tipped to become the youngest woman Cabinet minister, possibly as Chief Secretary to the Treasury. Major changes to the top Cabinet posts are not expected until after the elections.