Lord Levy's book: 'Mandelson's telling people I'm gay... and I am NOT GAY', says Brown

Known as Lord Cashpoint, he was at the heart of Mr Blair's team as well as being at the centre of the cash-for-honours scandal that rocked his last year at Number 10.

I vividly recall an early Labour strategy meeting at which I first grasped the depth of Gordon Brown's anger and resentment towards Blair and those he blamed – rightly or wrongly – for helping make Tony the party leader.

About 20 minutes into the proceedings, a hunched and dishevelled figure walked in, unceremoniously plopped himself down in a chair and, without so much as looking up, took out a pen and began scribbling notes.

At the end of the meeting, still having spoken not a word and with only a brief and unfriendly upward glance, he rose and left. I found the scene astonishing at the time.

Scroll down for more...

A few weeks afterwards, Tony turned to me as he was towelling down after a swim at my house in North London and remarked: "What am I going to do about Gordon and Mandelson?"

I had by now come to understand that whenever he asked that kind of question, he had a plan in mind – one that almost invariably involved me.

"You're good with people," he said. "Why don't you have a talk with them both, see whether you can patch things up?" I saw Peter first for lunch in the Commons and explained how worried Tony was about the friction between two of the people he most relied on to change Labour and the country.

Peter, who had been on the receiving end of many months of deadly glares from Gordon, said: "It's going to be difficult but if Tony wants us to have a go at patching things up, of course I'm ready to do anything I can."

Buoyed, if still not confident, I then arranged to have lunch with Gordon.

We met on a Wednesday in a crowded top-floor restaurant in Millbank, a few minutes' walk from Parliament.

Gordon was friendly – at least until I explained my mission.

"Make up with Peter?" he hissed in an angry whisper.

Then, as his voice gradually rose from dispatch-box volume to a near shout, he exclaimed: "Peter? He's been going around telling everyone that I'm gay! And I am NOT GAY!"

Dozens of people looked around in astonishment, no doubt assuming that I had tried – and thankfully failed – to proposition the Shadow Chancellor.