Brown aide quits to be an MP

Gordon Brown's right-hand man resigned today after being selected to stand for Parliament in a safe Labour seat.

The Oxford and Harvardtrained economist is considered so important that the vacancy in Mr Brown's team will take two people to fill.

Ed Miliband, a political adviser and brother of Schools Minister David Miliband, will be promoted to take over strategic thinking. And a regular Civil Service economist will be appointed to replace Mr Balls's numbercrunching skills.

The resignation so he can stand at Normanton comes at an awkward time for Mr Brown with the Treasury in the middle of tense Cabinet negotiations on spending.

Mr Balls is seen as a unique figure, combining streetwise political guile, top-level economic training and a seemingly supernatural ability to read the Chancellor's mind. Former Treasury permanent secretary Sir Andrew Turnbull once described him as "like an extension of Brown - you bolt on an extra server and increase the capacity".

Mr Miliband is one of Mr Brown's Labour Party special advisers and also knows the Chancellor's mind but he has less experience with the media.

One insider said: "It will be a return to the more usual division between special advisers and civil servants which Ed combined into one job." The most intriguing gossip is over the friendly rivalry between Mr Balls, 37, and David Miliband, 38. Like the young Blair and Brown, they are both tipped as potential leaders. The Schools Minister is a prot駩 of Tony Blair, while Mr Balls is firmly in the Brown camp. The possibility of them becoming deadly foes in a future leadership contest is fascinating.

One former Treasury figure who has worked alongside both predicts Mr Balls would be the winner if they stood against each other. "Ed is more political, and I mean really political," he said. "And he is capable of being ruthless, as you have to be in an organisation like the Treasury. We had real battles with the officials when we took charge.

"We had officials briefing against what we were doing and Ed was not afraid to ruffle a few feathers in return."

Among Mr Balls's scalps was former Treasury permanent secretary Sir Terry (now Lord) Burns who was seen as an obstacle to Mr Brown.

Several Cabinet ministers, too, believe they have been victims of Mr Balls's sharp elbows. In Whitehall negotiations, like the looming Comprehensive Spending Review, he joins in arguments with ministers as an equal.

Anthony Seldon's biography of Tony Blair tells how Mr Balls shouted at the Prime Minister in rage when the 2001 election was postponed due to foot and mouth.

Many ministers expect Mr Balls to be in the Cabinet himself, perhaps even as Chancellor, within a few years.