Demoted Cook will keep London residence

Robin Cook will be allowed to keep a grace-and-favour residence in central London as a consolation prize for losing his job as Foreign Secretary.

He had been expected to lose his luxurious house at Carlton Gardens, as well as his magnificent Chevening country estate in Kent, following his demotion to Leader of the Commons. But his successor, Jack Straw, has decided to stay in his family home in south London, so Mr Cook will hold on to Carlton Gardens.

Friends said Mr Cook was devastated when Tony Blair broke the news of the demotion, which they said flew in the face of reassurances Mr Cook had received in recent weeks. MPs said he was so shocked at the demotion that he had to be talked out of resigning from the Government altogether.

Downing Street has been anxious to stress the importance of his new job as Leader of the Commons, arguing that they need a big hitter to steer through a series of important Bills in the next 12 months.

One theory about the reason for Mr Cook's removal is that, despite a formidable intellect and debating style, he turns off moderate voters. Were Labour to press ahead with moves towards a referendum on the euro, Mr Straw could prove more voter-friendly.