Cameron's gamble: Ken Clarke returns to the Tory front bench

Controversial figure will face Lord Mandelson as shadow Business Secretary

Ken Clarke will make a controversial return to the centre stage of British politics today when David Cameron unveils him as the new shadow Business Secretary, despite concerns over the appointment already emerging within the party.

Some senior Conservatives see the return of Mr Clarke as a gamble because of his pro-European stance and record of taking a different opinion to the Tory leadership on economic policy. Mr Clarke's words in support of the Government's 2 per cent VAT cut, a measure strongly criticised by the Tory leadership, were used against Mr Cameron during last week's Prime Minister's Questions.

But Mr Cameron will go ahead with the appointment in an attempt to bolster party credibility on the economy. He believes Europe has slid down the voters' agenda and the election will be dominated by the economic downturn.

Tory central office was adamant that the appointment was not a comment on the performance of George Osborne, the shadow Chancellor, even claiming it was Mr Osborne who first proposed the idea in December.

Mr Clarke's return to the fray was agreed on Saturday, when he met Mr Cameron and Mr Osborne at the shadow Chancellor's home. The move will see Mr Clarke spar with another recent returnee to frontline British politics, Lord Mandelson.

Mr Clarke is said to be "fully signed-up" to the party's economic policy and has agreed not to cause problems over Europe. "He will not change his views on Europe, but he fully accepts that the party's position on the issue is now clear and he will make no attempt to change it," a senior Tory source said.

But a senior backbencher expressed fears about Mr Clarke. "Every time he appears in the media, he will be dogged by questions over Europe," the MP said. The appointment has also been questioned on the party's right wing. Former minister John Redwood said: "We need an Opposition which opposes the errors of this government's economic policy, and shows the right judgement when it does something as dangerous as the VAT reduction."

The current shadow Business Secretary, Alan Duncan, will not be moved out of the cabinet, with Tory sources saying he has been offered a "senior Shadow Cabinet role". Mr Cameron believes there have been unfair and concerted attempts to undermine Mr Duncan, who will be given a new portfolio.

Mr Cameron had wanted to wait until the completion of the official investigation into Caroline Spelman's use of expenses to announce his reshuffle. But he has decided to press ahead as the verdict could still be many weeks away and he feared waiting longer risked making him look indecisive.

He could still pull a surprise in his new shadow team, which is likely to be his last reshuffle before the next election. Only Mr Osborne and William Hague are said to be "rock solid" in their positions. It could mean a place on the front benches for Lord Trimble.

Speculation that shadow Culture Secretary Jeremy Hunt would replace Caroline Spelman is wide of the mark. The grassroots supporters' new favourite Eric Pickles, currently the Communities Secretary shadow, will miss out on the position. Ms Spelman is expected to remain in the role.