Brown's reshuffle included the move of spokesman Damian McBride into a less high- profile role at Downing Street.

Senior Labour sources last night said that Mandelson had insisted McBride be sidelined, following growing complaints from many Labour MPs about his briefing style.

The move to sideline McBride is being seen by ministers as a clear sign that Mandelson will play a hugely significant role as Brown's chief adviser, in much the same way as he did for Tony Blair.

They also now fear that the move might trigger a backlash from Brown's close allies if they think they are being sidelined by Mandelson. Last night one newspaper claimed Mandelson had poured "pure poison" about Brown into the ears of a senior Tory just weeks before rejoining the Cabinet.

And the Prime Minister's closest Cabinet ally, Schools Secretary Ed Balls, who is understood to have lobbied against Mandelson's return, declared the move was a "risk".

Mandelson himself told a newspaper last night that he and Brown would be "joined at the hip" from now on. The Business Secretary acknowledged that his relations with Brown had been "a bit combative, probably a bit prickly" at times, but insisted they had "never entirely lost our friendship".

In another sign of how wide Brown may be prepared to cast his net in recruiting to the Cabinet, another newspaper claimed the Prime Minister was considering how he might bring David Blunkett back.

Among the casualties of the reshuffle, McBride is a long-time servant of the Prime Minister and moved from the Treasury along with him last year.

However, Mandelson is said to loathe him, and has argued with Brown recently that he needs to be deposed.

Alastair Campbell and even Neil Kinnock are also understood to have called for the changes to Brown's Downing Street operation, which has received much of the blame for the chaos at Number 10 in recent months.

One senior Labour source said that Mandelson's influence over Brown had been growing for months. "They have been speaking pretty much every day. Eventually, Gordon just decided, if we are speaking every day, I should just get you in the Cabinet."

The insider said that McBride first had to go. "That was a condition of the deal. I don't think without it he would have come back."

One Cabinet minister said that the moves would be welcomed. "Gordon has been very badly advised. That will now change."

However, Balls gave a less than enthusiastic response yesterday to the changes.

He said: "Of course it's a risk, but at the same time it's also a great opportunity for our country and our Government. Gordon Brown looked at this carefully and he decided it was worth that risk, and I think that was the right thing to do."

Other sources said that Alastair Campbell had emerged as a key player in Mandelson's return.

Blair's former spin doctor was "intimately involved" in discussions to bring Mandelson back to the Cabinet last week, according to one senior figure.

Another minister said: "Both Alastair and Neil Kinnock have been giving advice to Gordon over the changes to the backroom team. There was a dysfunction there that had to change."

Along with Mandelson, the return of Campbell to Brown's inner circle of advisers reunites three of the four key figures in the original New Labour team – with just Tony Blair on the fringes.

Labour slips

A NEW poll has suggested Labour could lose 164 seats in the next general election, giving the Conservatives victory with a majority of 78.

Polling group ICM interviewed around 1,000 people in the 192 Labour-held seats where Tories are in second place and require a swing of 15% or less to win. Some 43% of voters questioned said they would vote Tory, against 34% for Labour and 15% for the Liberal Democrats. Some 50% thought David Cameron would make the best prime minister, while only 35% preferred Gordon Brown. However, 58% thought Brown should stay on as Prime Minister for now, against 36% who said he should step down.