'PM wanted Mandelson to turn down EU trade job'

Peter Mandelson's return to frontline politics was marred today by claims he accepted his new job as European Commissioner for trade against Tony Blair's wishes.

It was said the two old friends had argued about Mr Mandelson's possible return to Cabinet office in Britain.

Westminster insiders believe the Prime Minister wanted Mr Mandelson to remain on the back benches until after the next election, when he would give him his third senior ministerial job.

But a senior Labour source told the Standard that the Hartlepool MP - confirmed yesterday in one of the European Union's highestprofile positions - was not prepared to wait that long.

The argument between the PM and Mr Mandelson is thought to have lasted two days, and to have forced Mr Blair to postpone a planned Cabinet reshuffle. Other senior figures, including Education Secretary Charles Clarke, are said to have intervened to persuade Mr Mandelson to remain in London - to strengthen Mr Blair's position after party infighting.

However, they failed to persuade him to turn down the Brussels post. In the end he was not sure Mr Blair would be strong enough to bring him back against the will of the Chancellor, Gordon Brown.

It is reported that Mr Brown, who has never forgiven Mr Mandelson for backing Tony Blair for the party leadership, has conspicuously failed to send Mr Mandelson any message of congratulation on his new job.

The Hartlepool MP has long set Mr Mandelson is one of the PM's most trusted advisers, and has played a crucial role in steering Mr Blair through his troubles over Iraq.

For his part, Westminster insiders say, the PM has long felt guilty about forcing Mr Mandelson's second resignation, over the Hinduja brothers passport affair.

Mr Mandelson's European appointment raises new potential for conflict with Mr Brown.

Although they will have to work together at trade conferences, the Brussels posting could lead to clashes when Britain takes over the EU presidency next year.

Mr Mandelson's job, which comes with a £195,000a-year salary, is to promote the interests of the EU as a whole, rather than simply those of Britain.

A Treasury source said: "Peter Mandelson will be acting for the EU, not for Britain.

"Gordon Brown will be making it clear he wants the best deal for UK taxpayers."