The Prime Minister is expected to appoint former Northern Secretary Peter Mandelson as European Commissioner in Brussels, according to reports.

The decision, if pursued, may further imperil the already strained relationship between Tony Blair and Chancellor of the Exchequer Gordon Brown.

Mr Brown is said to be opposed to allowing Mr Mandelson, nicknamed the “prince of darkness,” to have the continued trust of the Prime Minister.

And in a highly irregular joint public statement yesterday, the two senior politicians said they had “agreed a line should be drawn under the events of this week.”

The two men agreed to set aside their spat over dinner at Downing Street on Thursday evening.

The statement said the Labour leadership was committed to “getting across key messages including the current and continuing strength of the British economy” and exposing “the true nature of the Tory party under Michael Howard.”

Mr Brown made a public statement this week after he was refused permission to sit on Labour’s ruling body, the National Executive Committee.

He was said to be exceedingly annoyed after losing control of the party’s election campaign, which was effectively handed over to Mr Mandelson.