The Prime Minister put the party on an effective war footing as he announced that the Chancellor and the Secretary of State for Northern Ireland had been given the key roles.
Mr Brown and Mr Mandelson formed the "dream team" that oversaw the party's landslide victory in 1997 and their reunion follows a raft of stories suggesting bitter rivalry between them. Mr Blair has described the antagonism between the pair as a "Titanic but ultimately irrelevant personality feud" and is keen to kill off for good the row that has scarred the Government.
The move, which ensures that the pair are locked into a formal alliance, was seen at Westminster as an attempt to force them to work constructively together.
Although there was some speculation that the announcement could allow Mr Blair to opt for a snap poll next year, it is more likely that he will call an election in 2001.
In a statement issued last night, Mr Blair said that Cabinet Office minister, Ian McCartney, would replace John Prescott to rally Labour voters and activists in the country.
Mr Brown will chair the General Election Strategy Committee, while Mr Mandelson will chair the General Election Planning Group.
Douglas Alexander, the 32-year-old MP for Paisley South, will act as campaigning co-ordinator and deputy to Mr Mandelson, helping with election planning. Mr Alexander, who masterminded Labour's campaign for the Scottish parliamentary elections this year, will have a major role while Mr Mandelson copes with his duties in Ulster.
The appointment of Mr Alexander - a close ally of Mr Brown - as Mr Mandelson's deputy may also be an attempt to reassure backbench MPs that Mr Mandelson will be kept under control. However, the decision to recall Labour's most skilful spin doctor to the post that made him famous confirms he has Mr Blair's loyalty. It also follows recent fears that the rivalry between the Chancellor and Mr Mandelson could spill into further embarrassment when Geoffrey Robinson, the former paymaster-general, publishes his memoirs this winter. Mr Robinson, whose pounds 373,000 loan to Mr Mandelson triggered his resignation last year, is seen as a close ally of Mr Brown.
Relations between the two ministers have been strained since Mr Mandelson backed Mr Blair in the battle to succeed John Smith in 1994. In Opposition, Mr Blair was furious about the split between the two men and would regularly ask his advisers: "Why oh why can't my two best people get on with each other?"
Despite their at times bitter feud, Mr Mandelson and Mr Brown worked closely on Labour's 1997 campaign and are credited with much of the damage it inflicted on the Tories. Yet the tensions have continued to simmer - and boiled over repeatedly in the wake of press briefings by Mr Brown's spin doctor, Charlie Whelan.
One of the low points occurred when Mr Whelan saidMr Brown believed that Mr Mandelson had "chickened out" of full privatisation of the Post Office during his tenure as the Secretary of State for Trade and Industry.
When the Hartlepool MP quit the Cabinet over the home loan affair, Mr Whelan's scalp was claimed despite his protests that he had nothing to do with the story.
Most recently, Mr Brown and Mr Prescott, another of Mr Mandeslon's key opponents, teamed up in July to block Mr Blair's plans for Mr Mandelson's early return from the political wilderness with a top Millbank job.
They also warned the Prime Minister not to appoint him to any domestic departments.
"This is a blood feud. They respect each other professionally, but Gordon will never forgive Mandelson for what he did," one insider said last night.
Mr Mandelson's recall to a crucial post will raise eyebrows among some Labour MPs, but most will welcome his return following the party's disastrous showing in the European elections.Reuse content