Peter Mandelson today made a sensational return to the Government as Gordon Brown’s Cabinet reshuffle got under way.

The 54-year-old will be quitting his post as European Trade Commissioner in Brussels to return to London to replace John Hutton as Business Secretary.

Former foreign secretary Margaret Beckett also made a comeback as “Cabinet Enforcer” – as one of the Prime Minister’s top advisors.

News of arch-Blairite Mandelson’s controversial return sent shockwaves through Westminster, given the fact that Mr Brown and Mr Mandelson have been the best of enemies for more than a decade.

However, it is believed the pair have been in regular contact during the last few weeks – with Mr Mandelson also attending the Labour Party Conference in Manchester last week.

Mr Mandelson returns to the top table for the third time, having twice resigned as Trade Secretary and then Northern Ireland Secretary due to unproven charges of corruption over a mortgage loan from millionaire Labour MP Geoffrey Robinson in 1998 and the Hinduja Brothers passport scandal in 2001.

It has been seen as a sign of Mr Brown attempting to beef up his economic team.

But the move provoked a mixed reaction from politicians with former Home Secretary David Blunkett, who twice resigned himself, describing the appointment as a “masterstroke”.

Labour MP John McDonnell, who challenged Mr Brown for the Labour Party leadership, said it was “an extraordinary step backwards into the worst elements of the Blair era”.

The change means Mr Hutton will replace Des Browne as Secretary of Defence.

Chief Whip Geoff Hoon is the new Transport Secretary – taking over from Ruth Kelly who today announced she was stepping down as MP of Bolton West at the next general election and whose resignation from the Cabinet triggered the reshuffle – with Nick Brown stepping into Mr Hoon’s shoes.

A new Energy and Climate Change department is to be headed by Ed Miliband.

By Sunita Patel