Peter Mandelson today made a sensational return to the Government as Gordon Brown’s Cabinet reshuffle got under way.

The 54-year-old will be quitting his post as European Trade Commissioner in Brussels to return to London to replace John Hutton as Business Secretary.

Former foreign secretary Margaret Beckett also made a comeback as “Cabinet enforcer” – as one of the Prime Minister’s top advisers.

The news of Mr Mandelson’s controversial return sent shockwaves through Westminster given the fact that Mr Brown and Mr Mandelson have been the best of enemies for more than a decade.

However, it is believed the pair have been in regular contact during the last few weeks – with Mr Mandelson also attending the Labour Party Conference in Manchester last week.

It has been seen as a sign of Mr Brown attempting to beef-up his economic team at a time when the focus is on the economy and the on-going global financial crisis.

Mr Mandelson returns to the top table for the third time, having twice resigned as Trade Secretary and then Northern Ireland Secretary due to unproven charges of corruption over a mortgage loan from millionaire Labour MP Geoffrey Robinson in 1998 and the Hinduja Brothers passport scandal in 2001.

The change means Mr Hutton will replace Des Browne as Secretary of Defence.

Chief Whip Geoff Hoon is the new Transport Secretary – taking over from Ruth Kelly,  who today announced she was stepping down as an MP at the next general election. Nick Brown will replace Mr Hoon.

No widespread cull at the very top level is expected with Chancellor Alistair Darling, Home Secretary Jacqui Smith and Foreign Secretary David Miliband all holding onto their posts.