As the Wall Street crisis began to envelop the City of London, it looked for all the world as though the Labour Party was more concerned with the fate of its leader: Gordon Brown had lost a second minister in five days and his authority was being questioned like never before.

But it was the possible failure of Britain’s biggest savings bank that was beginning to haunt the Prime Minister. The resignation of hitherto obscure members of his Government would be nothing compared with the political whirlwind if HBOS went under.

On Monday night, by chance or by design, he found himself at a City reception face to face with Sir Victor Blank, chairman of Lloyds TSB. Before him stood an old friend – and the one man who could ride to the rescue. Mr Brown then made a rare gamble, perhaps one of the biggest he has taken. In offering to facilitate a Lloyds takeover of HBOS, the Prime Minister knew he was making an unprecedented intervention.

Mr Brown had already been bitten once by the collapse of Northern Rock. Had queues of investors appeared outside Halifax branches, it might have finished him more swiftly than the assortment of MPs who have surfaced to attack him.

Yet his intervention could yet rebound. Some voters may not be so grateful if the deal sends tens of thousands on to the dole at a time when the economy is already contracting.

It was clear from the outset that Mr Brown and the Treasury could not let the Halifax go to the wall, and if the deal currently under consideration goes through, it has the benefit of not involving the use of taxpayers’ cash.

But if HBOS ends up having to accept a lower share price than it wanted, and the whole issue goes to the courts, Mr Brown may get it in the neck from its two million shareholders. To try to avoid such an eventuality, the Government has made clear that, if necessary, it would legislate to prevent the deal being blocked by competition rules. John Hutton, the Business Secretary, will use his powers under the Enterprise Act to ensure the merger is not referred to the Competition Commission “in the public interest”.

Mr Brown has always insisted that he is the leader best placed to take Britain through the economic pains. Now he has the platform to show that.

The nagging doubt for his friends, however, amid accounts of Cabinet gloom, is that he may not be given enough time as the bad news mounts: an Ipsos-MORI poll gave the Conservatives a thumping 28-point lead over Labour, and James Purnell became the latest Cabinet minister to refuse to condemn the rebels in his own party.

Mr Purnell, the Work and Pensions Secretary, said that he shared some of the concerns of the rebels. He also branded efforts to silence them as ridiculous. Tipped by some as a possible successor to Mr Brown, Mr Purnell told the New Statesman: “I think it would be ridiculous to pretend that you can’t complain when you’re worried. I mean, I’m worried that we’re 20 points behind [in the polls]. I’m not going to condemn people or question their motives. [But] I don’t agree with what they did.”

Eric Joyce, Mr Hutton’s parliamentary aide, was forced to deny that he would quit after the party conference. The mood around the Cabinet table this week suggested that the despair that has infected the parliamentary party has also taken root at a senior level. “It’s not quite as if we can’t meet Gordon’s eyes but everyone knows that this is all about him, that all the pressure is on him,” one senior figure said of Tuesday’s political session of Cabinet.

If few senior ministers believe Mr Brown will lead the party to the next election, the number of die-hards dwindled further once they compared notes after the gathering.

One well-placed source told The Times that the view of the most senior Cabinet members was that Mr Brown should be given time and space to manage his own exit, ideally in the spring of next year. “The plotters have been precipitate but they have begun the process. That process will take some time to work through.”

Yet in a further sign of the Prime Minister’s crumbling authority a damaging account of the session was leaked. “There were people staring at their hands, some scribbling on their papers, someone else on a BlackBerry. The mood was awful,” one source was reported to have said.

Mr Brown did not wish for the financial inferno that began on Wall Street and is now licking at London’s gates, but it must surely buy him a little time. For the scale of this crisis dwarfs his Westminster tormentors and provides a stage on which to showcase activity.

His speech next Tuesday will lay out what he and Labour are doing to help ordinary people caught up in the food, fuel and credit crises. He will be able to tell his party that the country would not forgive them if they turned in on themselves at such a time.

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