Lord Birt, the former Director-General of the BBC, is to make a dramatic return to public life after being appointed as Tony Blair's personal "strategic adviser" in Downing Street.
In a move that will have some civil servants fearing "Birtian" reforms similar to those at the BBC, the controversial peer has been given the task of finding fresh ideas to overhaul Whitehall and Government strategy.
Lord Birt, whose post is unpaid, will work in Mr Blair's new Forward Strategy Unit with a remit to develop "blue skies thinking" to shake up the Civil Service and ensure delivery of Labour's policy objectives, Downing Street sources told The Independent yesterday.
Mr Blair is understood to have approved the appointment at the weekend, just before he began his summer holiday in Mexico. The Prime Minister was particularly impressed by Lord Birt's work as an adviser on the Government's 10-year Crime Plan, which was published by the Home Office earlier this year.
Lord Birt's colourful past, including controversies about his tax status and Armani expense accounts, has not deterred Mr Blair from seeking the advice of a man whom he rates as a fellow moderniser, sources said.
Downing Street hopes that his wide-ranging brief, backed by his experience in reforming a multimillion pound public sector organisation, will help Labour secure a third term.
However, given the peer's close friendship to Mr Blair and to the former Northern Ireland Secretary Peter Mandelson, the appointment is likely to trigger further accusations of "cronyism" at the top of Government.
Lord Birt, who sits as a crossbencher in the House of Lords, will report directly to the Prime Minister in his new job and work alongside Geoff Mulgan, the head of the Forward Strategy Unit.
The new unit, which was created within days of Labour's second landslide general election victory in June, is in effect Mr Blair's own private think tank. Unlike the Performance and Innovation Unit, another of Downing Street's strategic bodies, it will not have to make any of its reports public.
Although the new arrangements are designed to allow the unit the freedom to generate more controversial proposals for reform, critics are bound to claim that the confidential nature of the job means that Lord Birt's influence will be far from transparent.
Downing Street said that Lord Birt's report for the Crime Plan, which focused particularly on the 100,000 persistent offenders who commit more than half of all recorded crime, underlined his ability.
"The Prime Minister found his contribution to the Crime Plan useful and thoughtful and decided that he could use his talents in a wider capacity," a Downing Street spokeswoman said last night. Until now, the Prime Minister's office has denied any suggestion that Lord Birt would be offered a new role.
Lord Birt, who will work part-time but have his own desk in Downing Street, is seen as one of the most influential of a number of external experts being recruited by the new unit. Among his priorities will be to come up with imaginative ways of breaking Civil Service deadlock in delivering the Government's priorities.
Mr Blair was repeatedly frustrated throughout the last Parliament at the lack of co-ordination and slowness of the Whitehall machine and is determined to change the system for his second term.
Lord Birt's work at the Forward Strategy Unit will complement that of two other centralised performance-chasing teams, the Delivery Unit and the Office of Public Services Reform.
The peer stepped down from his job at the BBC last year after an eight-year tenure that saw a heavily criticised sea-change in the corporation's culture and organisation. His supporters claim that he forced the broadcaster to recognise modern market-place realities and achieved value for money that directly benefited the licence-payers.
But critics countered that he stifled the BBC's tradition of creativity with an obsession with management consultants. He was also attacked for receiving a £380,000 golden handshake for his early retirement from the corporation.
Some ministers and officials were unimpressed with Lord Birt during his brief spell as a crime adviser. But Mr Blair has long remained an admirer of the peer, granting him a knighthood in 1998 and then a life peerage in 2000.