Britain's Brown bolsters cabinet, Mandelson back

By Tim Castle and Frank Prenesti

LONDON (Reuters) - British Prime Minister Gordon Brown overhauled his cabinet on Friday, recalling old hand and former enemy Peter Mandelson in an effort to shore up his premiership at a time of economic crisis.

The surprise return of Mandelson, the European Union trade commissioner, will strengthen Brown's position within his Labour Party at a time of doubts over his leadership and sniping from other former allies of Tony Blair, analysts said.

Mandelson will take on the office of business secretary and is expected to play a central role in a newly created economic council that will oversee the fallout from the economic crisis.

Twice a cabinet minister under Blair, Mandelson also quit twice under a cloud and some Labour members said he was such a divisive figure that Brown's bold and surprising move may not go down so well with the British public.

Brown and Mandelson have had many spats in a relationship going back 20 years. Initially close, the relationship soured after Mandelson backed Blair for the Labour leadership in 1994.

Speaking to reporters in Downing Street, Mandelson said Brown was doing an "exceptionally good job" and he was proud to have been asked to work in his government.

"The prime minister has asked me to come back. Our economy, like every other, is facing a very hard challenge as a result of the global financial crisis and in a sense it's all hands on deck," Mandelson said.

Brown's office said the prime minister and finance minister Alistair Darling would hold a news conference at 1515 GMT.