Mandelson said his name had been cleared

Mr Mandelson told the BBC part of him wanted vindication after the unfair manner of his last departure.

On Friday Prime Minister Tony Blair ended months of speculation about the future of his close friend, who has twice resigned from the Cabinet.

But the Tories say they believe he is too pro-European, while some Labour MPs criticised the move as "cronyism".

Mr Mandelson refused to be drawn on whether he had discussed a further cabinet post with Mr Blair.

MANDELSON'S CAREER 1979-82 Lambeth councillor 1982-85 producer at London Weekend Television Late 1980s Director of Labour Party Campaigns and Communications 1992 Became MP for Hartlepool 1994 supported Blair's leadership bid 1997 Ran Labour's election campaign 1997 Named Cabinet Minister Without Portfolio 1998 Secretary of State for Trade and Industry 1998 Resigned over Geoffrey Robinson house loan affair 1999 Returned as Secretary of State for Northern Ireland 2001 Resigned over Hinduja passports affair Profile: Peter Mandelson Mandelson 'to pursue EU reform'

But he told BBC2's Newsnight: "There is always a little bit of me that wants to come back to the Cabinet because I want to be vindicated in that sense given the rather unfair circumstances of my last departure.

"But I have always recognised the difficulties of returning to the Cabinet and I think now, for example, given the very predictable media frenzy that would have accompanied it would not be a good idea."

There was speculation the idea of his return to the cabinet for a third time was dropped after fierce opposition from some senior ministers, including John Prescott.

The appointment means a possibly uncomfortable by-election in Mr Mandelson's Hartlepool seat, where Labour has a 15,000 majority.

He is expected to take up his new job on 1 November, once the new commission has been approved by the European Parliament.

Mr Mandelson said Britain's influence in Europe had increased in recent years but he needed to raise Europe's stock with the British people.

Criticism

Mr Blair said: "We need the very best person representing Britain in Europe and Peter Mandelson has the skills, ability and contacts in Europe to make a great success of it."

But there has been criticism of the move from Eurosceptics within Mr Mandelson's own party.

Ian Davidson, of lobby group Labour against a European Superstate, described the appointment as an "appalling" example of cronyism.

And former minister Kate Hoey said it was a setback for the "yes" campaigners.

Tory co-party chairman Liam Fox said Mr Mandelson would not stand up for the UK in Europe as he was too pro-European.