Tony Blair is considering moving Gordon Brown to a new "super department" that combines the Foreign Office with the Department for International Development (DFID).
The Prime Minister is being urged by his closest allies to make Mr Brown "an offer he can't refuse" if he wins the next election with a comfortable majority.
The atmosphere of mutual recrimination worsened significantly this weekend with rival briefings over Mr Brown's role in the forthcoming election campaign and further revelations about Mr Blair's "wobble" last year. Supporters of Mr Blair say he made a personal plea to the Chancellor to play a central role in the campaign but has been rebuffed.
Mr Brown, meanwhile, pointed out that his role campaigning in the country was agreed at a meeting between the two men and John Prescott, the Deputy Prime Minister, last summer.
Relations between the two fell to a new low last week after Mr Blair upstaged his Chancellor's long-scheduled speech on Africa with a hastily arranged press conference. He pointedly refused to guarantee that Mr Brown would keep his Treasury role, at his monthly meeting with the press on Thursday.
A partial explanation for the bad blood between the two men comes in a new book, Brown's Britain by Robert Peston, serialised in today's Sunday Telegraph. It suggests that for more than six months the Prime Minister had repeatedly assured Mr Brown he would step down in the autumn of 2004, leaving the Chancellor to take over the reins. He then "cynically betrayed his oldest political friend."
Preparations for a post-election reshuffle are already well under way, a senior Government figure has told The Independent on Sunday. "It's coming from people at No 10 and the Cabinet Office, particularly Alan Milburn. They think that by adding the DFID to the Foreign Office they are making Gordon an offer he can't refuse," he said.
Mr Brown has given international aid and debt relief a high priority in his seven years as Chancellor. He leaves on Tuesday for a six-day tour of Africa and is leading efforts to negotiate multilateral debt relief while Britain has the presidency of the G8 and the EU.
Handing him total control of the Government's effort to reduce world poverty would, say Mr Blair's supporters, soften the blow of leaving the Treasury.
MPs familiar with the proposal warn that it would break one of Labour's key manifesto commitments. They point out that the first pledge that Mr Blair honoured after winning power in 1997 was to create a separate department for international development. Combining the Foreign Office with DFID would also anger leading charities which campaigned for a separate department for decades, they say.
The option of moving Mr Brown is, nevertheless, under active consideration. In a little noticed interview Derek Scott, Mr Blair's former economics adviser, said that Mr Brown would find it hard to refuse.
"If after another election victory the Prime Minister said to the Chancellor that he needed to broaden his experience and go to the Foreign Office it would be a very difficult thing for Gordon to resist," he said.
A spokesman for Mr Brown declined to say whether the Chancellor would accept the move to a combined Foreign Office and DFID. "We never comment on these briefings. We are getting on with the job," he said.
With Labour MPs becoming increasingly worried that the rift at the top of the Government threatens to derail the coming election campaign, the party moved this weekend to trail a show of unity. On Tuesday, Mr Brown, Mr Prescott and Mr Milburn will jointly unveil posters highlighting Labour's record on the economy, a party spokesman said.
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