Mandelson had no need to resign from Cabinet, says Downing Street

Tony Blair admitted yesterday that Peter Mandelson would probably not have had to resign from the Cabinet if current information about his role in the Hinduja passports affair had been available at the time.

Downing Street issued a strong statement of support for Mr Mandelson even though Sir Anthony Hammond QC said documents that had come to light did not change the original findings of his official inquiry.

In his second report into the controversy, published yesterday, Sir Anthony insisted that a disputed telephone call between Mr Mandelson and the former Home Office minister Mike O'Brien, which Mr Mandelson does not remember, was likely to have taken place.

But Mr Blair's official spokesman said it was a pity the new documents from Mr Mandelson's private office were not available in January last year, because they made clear he acted entirely properly over the passport application by S P Hinduja, an Indian businessman.

The Downing Street spokesman said: "The picture of events would have been far clearer and less open to misinterpretation; the sequence of events including the resignation may well have been different." He said those who doubted Mr Mandelson's word "were wrong to do so".

The Labour MP Peter Kilfoyle, a former defence minister, accused Downing Street of trying to "spin the situation in such a way as to make it more palatable for Mr Mandelson to be given a non-governmental job".

Mr Mandelson said he was grateful Sir Anthony and the Prime Minister had "fully cleared" his name. If the papers had been available at the time of his resignation "it would have created a different picture and the outcome would have been different", he said. The former Northern Ireland secretary insisted he had no ambition to return to the Government. He said: "My life will be in politics, in public life, I'm not going to leave Parliament. Even though ... I'm not seeking a return to the Cabinet – there are other things I can do and will do for my constituents and the country."

Norman Baker, the Liberal Democrat MP whose Commons questions sparked the controversy, denounced the report as "a whitewash whitewashing a whitewash".

The Tory leader, Iain Duncan Smith said the £20,000 bill for the second Hammond inquiry, on top of the £200,000 cost of his initial report, was a complete waste of money. "It is absurd to have spent hundreds of thousands of pounds on a disgraced ex-minister," he added.