Campbell takes up the story: "He started to leave, then came back over, pushed at me, then threw a punch, then another. I grabbed his lapels to disable his arms and Tony Blair by now was moving in to separate us and Peter just lunged at him, then looked back at me and shouted: 'I hate this. I'm going back to London!!'"

Meet Gordon Brown's new Business Secretary in his revamped Cabinet.

The above episode was revealed two years ago, in Campbell's long-awaited diaries. And just like the era which that doorstep of gossip examined, the career of Peter Mandelson as a frontline British politician had appeared to be consigned to history. So when, on Friday afternoon, an older and slightly more lined Mandelson ambled up Downing Street to accept his third Cabinet position, the moment felt almost surreal.

Political analysts immediately set about analysing whether this was Brown's nadir, or his moment of genius. For many others, however, it may well simply felt like déjà vu. Mandelson? Him again? Eh?

Parts of Labour may never have accepted Peter Benjamin Mandelson, but he was always part of the party. He was born in London in 1953, and his maternal grandfather was Herbert Morrison, one of the Labour titans who served in the epoch-making post-war Atlee Government.

Mandelson quickly set about a life-course typical of many New Labour politicians. First he joined the Communist Party. Then he went to Oxford, to read Philosophy, Politics and Economics. And then, gradually, he moved back into the Labour fold. By 1982, disillusioned with the car-crash the party had become, Mandelson quit to become a TV producer (meeting one of his life-long friends, former BBC director-general John Birt). It was only three years later that his party allegiances saw him return, when Neil Kinnock persuaded the young moderniser to become his communications director.

It was Private Eye that coined the nickname that follows him around to this day: "Prince of Darkness". It was a back-handed complement. Determined to ensure that Labour fought back against the ruthless Conservative machine, he invented the party's rebuttal unit which spat out immediate denials of the frequent Tory slurs that headed Kinnock's way. The media contacts would come in handy later in his career when, in 1998, Birt issued a memo to BBC employees not to discuss Mandelson's private life (this after the columnist Matthew Parris said on Newsnight that he was gay). The media leapt on Parris's disclosure and details of Mandelson's partner, Reinaldo Avila da Silva, were published.

By the early Nineties, Mandelson was working alongside the two men who would define his political life – Tony Blair and Gordon Brown. Encouraged by Kinnock, the threesome began work on what, in time, would become known as "the Project". By the 1992 election, Mandelson ditched the Red Flag and replaced it with a rose. But still Labour lost. Brown and Blair rose ever higher in the party rank and file, emerging as the obvious successors to the leadership when John Smith died in 1994. There, the New Labour soap opera began. Despite the widely-held view that Brown was the senior man, Mandelson famously offered his support to Blair. After a friend joked one night that "you have to be tough on Gordon and tough on the causes of Gordon", Mandelson is said to have replied: "I'm afraid I am the causes of Gordon."

Mandelson's support for Blair was more than just a political decision – it was also based on the pair's intensely close friendship. Blair's biographer Philip Stevens described Mandelson as Blair's "consigliere". If Blair's first call of the day was still to Brown, his second was to Mandelson, whom he appointed Minister without Portfolio after winning the election. He was the only colleague with whom Blair felt able to open his heart. The relationship earned him plenty of enemies and ensured the spread of many damaging if often apocryphal stories, such as the one about the chippy in his Hartlepool constituency, where Mandelson was said to have mistaken mushy peas for guacamole.

The contradiction was that while Mandelson was second-to-none at giving out sound advice, he had a blind-spot about his own behaviour. In 1998, journalist Paul Routledge revealed that Mandelson – by this time Trade and Industry Secretary – had accepted a private loan from Labour donor and minister Geoffrey Robinson without declaring it to anyone. It was a huge mistake. And yet Mandelson did not think it mattered, insisting for several days that it was "a private matter", only to burst into tears when it dawned on him he would have to quit. He was quickly back in the Cabinet – as Northern Ireland Secretary – but just as quickly out again, after getting mixed up in a row over whether he had lobbied for a wealthy Indian family, the Hindujas, to get British passports. Blair fired him again – prematurely, after he was subsequently cleared of any wrong-doing. Exiled, his compulsion to seek the limelight was nevertheless in evidence. After winning his Hartlepool seat back at the 2001 general election, Mandelson famously declared: "I'm a fighter, not a quitter!"

Three years later, however, he did quit, to become Britain's EU trade commissioner, where, for the last four years, he has gained a reputation as a big supporter of free trade – a position which recently saw him engaged in a fierce spat with French President Nicolas Sarkozy. But, it appears that the heady aroma of the greasepaint on the home stage has tempted him back once more. "Third time lucky," he quipped to reporters on Friday afternoon.

The big question remains: has his feud with Brown really finished? During the 2001 general election, again according to Campbell, Brown is said to have scrawled "who will silence Mandelson?" on a piece of paper in his office, after his nemesis had written a newspaper article. Now Brown has handed Mandelson the stage. The Prime Minister sought to portray his decision on Friday as one based on the needs of the economy. Mandelson will, from tomorrow, sit as part of an economic council which will monitor the current financial crisis. But with his vast experience of the workings of Number 10 and of the media, it is hard to imagine that he will not play a wider role within the newly relaunched Brown Government.

And with Alastair Campbell also back in the fold – speculation is rife that it was he who came up with the "no time for a novice" line in Brown's speech – there is now a distinctly Blairite feel to the Brownite operation. But will punches follow?

You've been googled

• In 1978, the future New Labour reformer travelled to Cuba to take part in the Soviet-organised World Festival of Youth and Students – with Arthur Scargill.

• One story sums up his bitter relationship with Gordon Brown. He once asked the PM for 10p to phone a friend. Brown is said to have replied: "Have 20p, then you can phone them both."

&149 Mandelson insisted after taking on his job as EU commissioner that he was no longer interested in the British stage. "I have moved on from being a British parliamentarian; I have moved on from being a New Labour politician."

• One MP recounts how Mandelson recommended dealing with bad press. "Don't bother speaking to the editor. You go directly to the leading shareholder," he recommended. It is said that several journalistic careers in Hartlepool – where Mandelson was an MP – ended as a result.