The Prime Minister faces a fight for survival after confirming he knew about Lord Mandelson's ties to paedophile Jeffrey Epstein before making him Washington ambassador.
Sir Keir Starmer told Parliament he received warnings about the peer's relationship with the disgraced financier - including stays at Epstein's New York flat during his incarceration for child sex offences.
Labour MPs erupted in fury as the admission triggered comparisons to terminal political crises. Senior government figures privately condemned the appointment as indefensible. One cabinet minister described Mandelson's selection as "very hard to defend" and labelled it "yet another self-inflicted wound."
A second minister told colleagues the situation felt "terminal" for Starmer's premiership. A third described his Commons performance as "physically painful" to witness.
Baron Hutton of Furness delivered a devastating verdict on LBC Wednesday evening. The Labour peer said he believed Starmer's handling of the Mandelson scandal "could well mark the end of the prime minister's time in office."
He added: "The issue is the leadership from the prime minister, and I think unless that changes dramatically, I think the government is in serious trouble."
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Parliamentary chaos erupted as Starmer attempted to limit document disclosure. However, the Prime Minister suffered a humiliating last-minute retreat, eventually agreeing to let a panel of MPs and peers determine which Mandelson appointment papers should enter the public domain.
Angela Rayner spearheaded the rebellion against her former boss. The ex-deputy prime minister - viewed as a potential leadership challenger - rallied backbenchers demanding full transparency. Morgan McSweeney faces calls for his removal over his central role in selecting Mandelson.
Brian Leishman, Labour MP for Alloa & Grangemouth, declared McSweeney's position "untenable." However, Starmer mounted a Commons defence of his aide, calling him an "essential" team member.
Scotland Yard delivered another blow by preventing publication of materials Starmer claimed proved Mandelson lied. Officers warned disclosure would be "prejudicial" to their ongoing criminal investigation into the peer.
Mandelson faces potential prosecution for misconduct in public office - an offence carrying a maximum life sentence. Starmer delivered an extraordinary denunciation of his own appointee.
He said: "Mandelson betrayed our country, our parliament and my party. He lied repeatedly to my team when asked about his relationship with Epstein before and during his tenure as ambassador. I regret appointing him. If I knew then what I know now, he would never have been anywhere near government."
Conservative leader Kemi Badenoch extracted a crucial admission during exchanges.
Starmer conceded he knew Mandelson maintained contact with Epstein following the financier's jail term for soliciting prostitution from a minor. Cabinet Office vetting documents contained the information, though Starmer insisted he remained ignorant of the "sheer depth and the extent of the relationship."
He said: "He lied about that to everyone for years, and new information was published in September showing the relationship was materially different from what we'd been led to believe."
The Cabinet Office propriety and ethics team produced a two-page assessment flagging multiple problems. Officials highlighted Epstein's friendship with Mandelson, potential conflicts surrounding his lobbying business and details of past controversies.
The report included links to photographs showing Epstein and Mandelson together.
Badenoch called Starmer's prior knowledge "absolutely shocking."
She said: "The prime minister chose to inject Mandelson's poison into the heart of his government. His catastrophic lack of judgment has endangered national security, compromised our diplomacy and embarrassed our nation."
Starmer initially proposed releasing appointment files while allowing the cabinet secretary to withhold or redact material affecting national security or international relations.
Angry scenes immediately erupted across the Commons chamber. Labour MPs forced an instant government reversal through threatened rebellion.
The former deputy prime minister argued "public disgust" over the appointment process required parliamentary scrutiny.
Rayner insisted the Intelligence and Security Committee should access all documents to "keep public confidence" in government procedures. Dame Meg Hillier, Treasury select committee chair, backed the call alongside John McDonnell, who served as Jeremy Corbyn's shadow chancellor.
Both demanded the ISC receive complete evidence without redactions. Government managers hastily rewrote their amendment to the Conservative motion.
The revised text granted the ISC access to unredacted documents, averting a parliamentary defeat. The Metropolitan Police compounded Starmer's crisis by objecting to "certain documents" shared by the Cabinet Office.
Officers warned release could "undermine our current investigation" into Mandelson's conduct. Detectives are examining allegations the peer passed market-sensitive information to Epstein while serving as business secretary in Gordon Brown's Labour administration.
