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'Mandy the movie' hits the cutting room floor after star's wobble

A further twist in the tale of Lord Mandelson and the Rothschild family was played out yesterday in a small market town in Wales, when the former business secretary revoked permission for Hannah Rothschild to show a documentary she has made of the old family friend.

Ms Rothschild, 48, the daughter of Lord (Jacob) Rothschild, had followed Lord Mandelson from October 2009 up to last month's general election to create a portrait of the man as the power behind Gordon Brown's throne.

The film, entitled The Real PM, promised to show unflinching detail of both Mandelson's personal life and him at work within the Government. But a day before clips of the documentary were to preview at the Hay Festival, Ms Rothschild was contacted by Lord Mandelson, who insisted she could not use the footage.

The festival organisers sent out a carefully worded email yesterday: "Hannah Rothschild's film The Real PM: A Portrait of the Real Peter Mandelson has been withdrawn on the insistence of the subject." The documentary was to be screened by the BBC within months. It is now unclear if that will happen. Ms Rothschild produced the film The Jazz Baroness about her great-aunt Nica's relationship with pianist Thelonius Monk, which was shown on the BBC.

Speculation about the cancellation focused on the Labour peer's writing of his memoirs, as revealed in The Independent last week. They will be published this summer by HarperPress, raced out ahead of Tony Blair's autobiography The Journey, which will be published on 2 September.

Mandelson's book comprises diary notes he has taken over the past 20 years. The publishers promise that it will be "frank, honest and revealing... a dramatic first-hand narrative", and that it will "lay bare Peter Mandelson's intimate, complex relationship with Britain's two New Labour prime ministers".

The friendship of Mandelson, 56, and the Rothschilds spans two decades. Ms Rothschild's father owns the opulent clifftop villa in Corfu where the Labour peer regularly holidays, most notoriously in 2008 when George Osborne, a fellow visitor, claimed that the then-Labour minister had been "dripping poison" about Gordon Brown.

Last year, Lord Mandelson met the son of the Libyan leader Colonel Gaddafi at the villa, a week before the announcement that the Libyan perpetrator of the Lockerbie bombing, Abdelbaset Ali al-Megrahi, would be freed in Scotland. The two discussed the prisoner but Mandelson said he insisted the matter was one for the Scottish authorities. After the election defeat, he retreated for a holiday to the Klosters chalet of Hannah's brother, financier Nat Rothschild, 38.

Lord Mandelson was unavailable for comment last night.