Opposition parties are demanding a clear explanation of Peter Mandelson's role in securing a British passport for the Indian entrepreneur, Srichand Hinduja.

Downing Street conceded this morning that Mr Mandelson had made personal contact with the then Immigration Minister, Mike O'Brien - something Mr Mandelson initially denied.

The contact took place in June 1998, when Mr Mandelson was the Cabinet Office Minister responsible for the Millennium Dome.

The embarrassing fact is that Mr Hinduja and his two brothers subsequently made a �1m donation to the Dome.

And in 1999, Mr Hinduja received a British passport.

Commons misled

The Liberal Democrat MP, Norman Baker, said that - even if it was still impossible to prove a link between the donation and Mr Mandelson's approach to the Home Office - he had been misled when he raised the issue in the Commons yesterday.

The Culture Secretary Chris Smith, told Mr Baker that nothing improper had taken place - and that the only contact had been between civil servants.

Srichand Hinduja approached Mr Mandelson following a failed citizenship application

This echoed Mr Mandelson's own initial response: "To the limited extent that I was involved in this matter, I was always very sensitive to the proprieties.

"The matter was dealt with by my private secretary. At no time did I support or endorse (Mr Hinduja's) application for citizenship."

Now, however, Mike O'Brien - still a Home Office Minister - has said that he did have a two-minute conversation with Mr Mandelson about the Hindujas in 1998.

In response Mr Mandelson, having returned to his office and checked his records, has "recalled" the conversation as well.

Downing Street insisted that, since Mr Mandelson had not made representations on behalf of the brothers, the new information changed nothing.

The matter, the spokesman went on, had been dealt with properly and appropriately.

But the opposition parties are unliklely to let the matter drop.

The Shadow Cabinet Office Minister, Andrew Lansley, told the World at One that the Home Office should "come clean" about all the circumstances.

He added that he wanted to know why it had taken until today for the Government to admit Mr Mandelson's direct involvement.

Mr Mandelson himself made no direct response to the media. It was said that he was too busy with important talks on Northern Ireland at Downing Street.