The BBC's John Sergeant: "Martin Dowle is adamant he did not visit gay haunts with Peter Mandelson"

Martin Dowle said the claims, which originally surfaced in the magazine Punch two weeks ago, consisted of lies and innuendo.

An aide to Mr Mandelson said the trade secretary felt he had been wronged by these allegations and now that they had appeared more widely, he felt the need to put the record straight.

William Hague called the minister "Lord Mandelson of Rio"

When the original allegations about Mr Mandelson's July visit first appeared in Punch the press as a whole ignored them.

But last week, during the debate on the Queen's speech, Tory leader William Hague referred to the trade secretary as "Lord Mandelson of Rio".

That quip led to the hints at the allegations, that Mr Mandelson and Mr Dowle, a former BBC political correspondent, had visited gay bars and nightclubs in Rio, surfacing in newspapers the following day.

The comments by Mr Hague enraged ministers who saw it as a deliberate attempt to encourage more coverage of the story.

Martin Dowle, director of the British Council in Rio, has now given interviews to UK newspapers denying the allegations.

He accused Mr Hague of conducting a smear campaign against Mr Mandelson and described the Punch allegations as "rubbish".

Martin Dowle: Denied trips to nightclubs

Mr Dowle told The Guardian: "I think that Peter and myself have been the victims of a horrendous smear campaign that is like something out of Kafka.

"It is not clear who has been our judge, jury and prosecution."

The newspaper outlines Mr Mandelson's itinerary during his visit to Rio, which included a visit to restoration work, an art museum and a reception being held by the Brazilian ambassador to Britain.

Mr Dowle clearly denies the pair ever went to a nightclub.

Mr Mandelson and Mr Dowle were accompanied for most of the weekend by Mr Dowle's partner, Fabricio da Silva.

Mr Dowle, who said he continued to have the full confidence of the British Council, said he would extend the same invitation to other politicians that he knew from his days at Westminster.

Punch's Deputy Editor, Dominic Murphy, is standing by the story.

He said: "A man with 25 years' experience of journalism came up with the story, impeccably sourced in our opinion, and we stand by it. And the fact Mr Dowle denies it and Mr Mandelson's silence remains deafening proves nothing."