Gordon Brown is drawing up plans for a cabinet reshuffle next month that could see Peter Mandelson promoted to foreign secretary in a damage-limitation exercise after the June 4 local and European elections.
Mr Brown's allies say they expect Lord Mandelson, business secretary, to be given his dream job at the Foreign Office, taking the post once held by Herbert Morrison, his grandfather.
David Miliband, foreign secretary, would be found another senior post but any move would be seen as a demotion for a man seen last year as a potential leadership challenger to Mr Brown.
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