A close associate of Lord Browne, the former BP chief executive, was instrumental in helping Labour secure a safe seat for Ed Balls, the right-hand man of chancellor Gordon Brown.

Nick Butler, one of Browne’s closest advisers, was used in a plot to oust a sitting MP so that Balls could be assured of the nomination. It will enable Balls, tipped for a cabinet post when Brown becomes prime minister, to continue sharing a weekend home with his wife, who is a Labour MP in a neighbouring constituency.

The plot reveals the close ties between senior Labour figures and BP, the oil group nicknamed “Blair Petroleum”.

Butler, a former vice-president for strategy at BP, was set up in a job at Cambridge University’s Judge Business School by the company earlier this year. He heads a new Centre for Energy Studies that has been funded by BP with an initial £100,000 at the school.

Browne — who quit last week after lying in court — is chairman of the school’s advisory board.

The Centre for Energy Studies provided the prospect of a new career for MP Colin Challen to free up the constituency coveted by Balls. “He didn’t have any choice,” one Labour source said.

Balls will lose his Normanton seat due to boundary changes. It currently borders the Pontefract and Castleford constituency where his wife Yvette Cooper, the housing minister, is the MP.

Balls announced in November that he would seek the Labour nomination for the reorganised Morley and Outwood seat — close to his wife’s constituency.

Challen’s Morley and Rothwell constituency covers the main chunk of the new seat and the 53-year-old former postman was initially defiant. “I shall be seeking to be reelected as the Labour candidate,” he said.

However, in January Challen announced that he would not be standing against Balls. He said he wanted to devote his working life to fighting “climate change”.

During a select committee hearing in February, Sir Nicholas Stern, the Treasury’s outgoing climate change economist, let slip that Challen had been found a new role by Brown. This was denied by the Treasury.

Challen had, indeed, been offered work with Butler at the Centre for Energy Studies but Labour emphasises that this was short-term and not part of any deal to free up the seat for Balls.

When approached by The Sunday Times, Butler admitted it was a “possibility” Challen, who is working with the centre on organising a climate change conference, may be offered a permanent role. He insisted that this had never been discussed with Challen.

However, David Langham, Challen’s agent, indicated to an undercover reporter there were more definite fixed plans for Challen’s future. “He’s going to go to Cambridge University and work on the economics of climate change,” he said.

David Gauke, Conservative MP for South West Hertfordshire, who has asked questions in the Commons on the matter, said: “It’s all a stitch-up.”

Challen was unavailable for comment.

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