Gordon Brown thought seriously about bringing Peter Mandelson back into the Government immediately after he became Prime Minister in the summer of 2007, authoritative sources have told The Times.

The controversial return of the former European Trade Commissioner was the biggest shock of last month’s reshuffle, but even former Mandelson detractors now say that it was a key factor in the strengthening of Mr Brown’s position.

Reshuffles seldom achieve as much as their planners hope, but this one closed a dangerously widening split with the Blairites at a stroke. The arch-Blairite was back as Business Secretary and John Hutton, perhaps the minister thought most likely to jump ship, was given the job that he craved — Defence Secretary.

Indeed, Lord Mandelson might have been recalled a year earlier, when Mr Brown was considering how to make good a promise to form a government “of all the talents”. In the end he decided against it because Lord Mandelson was heavily involved in the world trade talks.

After a decade-long freeze, the two men who formed new Labour with Tony Blair are working together and talking as much as they did in the early years — when Lord Mandelson first identified the Brown-Blair axis as Labour’s potential salvation and used his communications influence to promote their skills to the party and country. Stories abound of Mr Brown leaving a group of industrialists or ministers to take a call from his Business Secretary — and not returning for 30 or 40 minutes. Civil servants in the Business Department speak of an occasion recently when their new boss stayed for hours at No 10 after a meeting of the National Economic Council, talking to the Prime Minister.

Those who wondered whether Mr Brown would regret the move are now saying that Lord Mandelson has brought impressive qualities to the Cabinet table and some of the younger members speak with awe of his first contribution: a comprehensive tour d’horizon, described variously as brilliant and stunning, which suggested that he must have been planning his return for months.

In fact, the job offer that came on the Wednesday before the Friday reshuffle was as much a surprise to Lord Mandelson as to the rest of the political world. But he had been advising Mr Brown privately for months and was more aware than most of the issues at the forefront of his mind. He apparently spoke with Mr Brown for more than three hours on the Thursday before the deal was done.

They are spending more time together than probably any other two ministers. The Business Secretary has accompanied Mr Brown on several of his regional visits recently and they were together again this weekend for a tour of Saudi Arabia and the Gulf states. One minister compares their reconciliation with a rock band reforming after ten years. “The bassist strikes up, the drummer comes in, and suddenly they all agree, ‘We are still quite good at this’.”

Lord Mandelson has become a dominant figure in Cabinet discussions and colleagues suspect that the line he takes is often agreed in advance with Mr Brown. The atmosphere between them appears to be amazingly warm, considering the froideur that preceded it. “They are funny. They tease each other in front of the rest of us. It is quite touching really,” one minister said.

How can all this have happened? Mr Brown is assumed to have resented Lord Mandelson for years for siding with Mr Blair for the leadership in 1994, and then delaying his ascent to the Labour crown thereafter. The truth is that they have been brought together to keep alive the new Labour project that they fought so hard together to launch. Past differences have been put aside, and both appear to wish they had done that earlier.

They are politicians of the same generation who listen to each other and have a strong respect for the other’s viewpoint.

“It is as if a friendship has been resumed and both sides have agreed never to think about all the nasty things that happened in the middle,” according to a No 10 insider. “They probably have more understanding than either would admit of why the other behaved as they did during the bad years.”

Mr Brown loves nothing better than talking about and planning political strategy, the area in which the Cabinet returnee excels. One friend said: “He probably misses those interminable chats he used to have with Tony. Now he’s got Peter to take his place.”

His new confidence may well have something to do with those discussions. Certainly the more aggressive stance he has taken in the Commons towards David Cameron and what he calls the vacuum in Tory policy stances has been prompted both by Lord Mandelson and Ed Balls, his closest ally.

Mr Brown has also been supportive of Lord Mandelson in the controversy over his links with Oleg Deripaska, the Russian billionaire. His line among colleagues is that Lord Mandelson was always going to be tested by a media storm after his appointment, and that he has seen nothing to suggest that anything untoward has happened. It is an irony, but perhaps not an accident, that George Osborne ended up being more damaged by the affair.

Lord Mandelson will always be more feared by the Conservatives than loved by Labour. But Mr Brown’s gamble is, for now, paying off.

Chronicle of a feud

1994 Brownites blame Mandelson, who had worked with both men to plot Labour’s path out of the political wilderness, as Tony Blair becomes leader

1996 Brown tells a rally: “Peter asked me for 10p to phone a friend the other day. I said, ‘Here, take 20p and ring them all’ ”

1997 After Labour’s victory a mutual friend describes Brown and Mandelson as “like scorpions in a bottle”

1998 Brown warns Blair against making Mandelson Trade and Industry Secretary with the words: “He’ll be trouble”

1999 Mandelson quits over an undeclared loan from a Brown ally

2001 Mandelson resigns for a second time over allegations that he attempted to help with a passport application for one of the Hinduja brothers

2007 Mandelson says he won’t seek a second term as EU Trade Commissioner, before Brown becomes Prime Minister, saying: “He can’t actually fire me”

2008 Mandelson tells reporters “We’ve had our ups and downs” after Brown invites him back into the Cabinet

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