Sir Digby Jones has confirmed that he held secret talks with David Cameron about running as a Tory-backed candidate for Mayor of London before being made a Labour minister by Gordon Brown.

The former CBI boss told The Times yesterday that he did not tell Mr Brown about his discussions with the Tory leader when he agreed to take a peerage and a job in the Government.

Mr Brown spoke of “men and women of goodwill” helping to form a “government of all the talents” when he entered 10 Downing Street. The appointment of Sir Digby as Minister for Business and Industry last week had proved the most controversial of those recruited from outside the ranks of the Labour Party.

The backlash against him among Labour MPs, peers and union leaders intensified sharply as it was revealed that the businessman had discussed a mayoral bid with Mr Cameron.

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Mr Cameron told Tory MPs about the discussions at a private dinner on Wednesday. “Digby Jones — he spoke to me a couple of months ago about standing as our candidate for mayor,” the Tory leader said. “He said he was interested and seemed keen, but then he went off and the idea went away.”

Contacted by The Times, Sir Digby said that he had been approached by a group of businessmen to run as an independent candidate in next year’s London mayoral elections. He said that he had called Mr Cameron in May to see whether he would support his bid.

“He said to me, ‘You’ll have to join the Conservative Party’, and I said no. I said, ‘Don’t take it personally, David, but I wouldn’t join the Labour Party or the Liberal Party either’. He said, ‘Unacceptable’, and we left it at that and parted as friends.”

The businessman, who will take the title Digby, Lord Jones of Birmingham, when he is made a peer formally next week, said that he had not told the Prime Minister about his conversation with the Tory leader because it had been in confidence. “I wasn’t asked,” he said. “There was no reason for me to tell Gordon Brown.”

Sir Digby said that he had “given up loads of business interests” to take up his position in the Government.

Although he has agreed to take the Labour whip in the Lords, the appointment of Sir Digby has angered many in the Labour Party.

Peter Kilfoyle, the MP for Walton, said he thought that the revelation that the former CBI boss had held secret negotiations with Mr Cameron less than two months ago confirmed the view that it had been a mistake to appoint him.

“I think that he’s not a fit and proper person to have in a Labour government,” he said. “You’ve got to have some loyalty.”

John Hutton, the Trade Secretary, tried to make light of grumbles about the appointment by joking in the Commons that he had heard “Comrade Digby singing the words of The Red Flag this morning as I passed his office”.

Labour sought to deflect attention back on to the Tories. A spokesman said: “If the story is true, Digby is one in a long line of people linked with the Tories’ desperate search to find someone who wants to be their candidate for London mayor. Digby clearly believes that the nation is best served by working as a minister in Gordon Brown’s Government.”

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