The Secretary of State for Trade and Industry had "fiddled" the figures because only 108 out of 2,040 "new" jobs quoted by him were actual vacancies.
The Government denied the allegations and in turn accused the shadow Trade and Industry spokesman, John Redwood, of indulging in "silly scare stories".
The controversy centred on Mr Mandelson's recent claim that the North- east could weather large-scale redundancies caused by the closure of Siemens and Fujitsu plants because more jobs were being created by other firms. He said the region had generated more vacancies than redundancies and added: "I want people to go out and talk up the region, I don't want people talking us down."
The Department of Trade and Industry said 2,000 posts had been created by a Barclays call centre in Sunderland, and Alloy Processing in Newton Aycliffe was offering 40 jobs.
But Barclays will have 100 jobs by the end of this month, while the steel company will have eight. Mr Redwood said Mr Mandelson had been "fiddling the figures to give the impression that more jobs have been created than lost."Reuse content