By Justin Parkinson and Gavin Stamp
Gordon Brown is reshuffling his government team. Keep across all the news, reaction and expert analysis as it happens.
MOVEMENTS SO FAR:
In: Peter Mandelson (business), Margaret Beckett (housing), Baroness Royall (leader, House of Lords)
Out: Ruth Kelly, Lord Digby Jones, Des Browne, Baroness Ashton (new EU commissioner)
Moved: John Hutton (to defence), Ed Miliband (energy and climate), Geoff Hoon (transport), Liam Byrne (cabinet enforcer), Jim Murphy (Scotland), Caroline Flint (foreign office), Tony McNulty (work and pensions)
Staying put: Alistair Darling, David Miliband, Jacqui Smith, Alan Johnson, Ed Balls, Hilary Benn, Shaun Woodward, Jack Straw, Douglas Alexander, John Denham, Harriet Harman, Hazel Blears, James Purnell, Andy Burnham, Yvette Cooper, Paul Murphy, Lord Malloch-Brown, Tessa Jowell
All times BST
17:55: A frantic day, full of surprises. There are still a host of middle ranking and junior ministerial jobs to be allocated including the important post of immigration minister. We should hear more about these in the coming hours and days and there could still be further twists. As one prodigal son of New Labour returns to the fold, all attempts to reach Alastair Campbell have so far proved unsuccessful!
17:45: Des Browne, one of the three Cabinet ministers leaving the government, says he told Gordon Brown of his intention to leave several months ago. He added that he would be a "strong and loyal" supporter of the government from the backbenches.
17:30: Former Labour deputy leader Lord Hattersley says he is "delighted" by Peter Mandelson's return to government. Despite policy differences between the two in the past, he says "in difficult times you need men and women of substance to run departments".
17:10: More reaction to Peter Mandelson's return to government. Tony Lloyd, chairman of the parliamentary Labour Party, says Mr Mandelson is a "big hitter" and says the reshuffle shows the government is determined to "address the real issues which face the country". But Derek Scott, a former economic adviser to Tony Blair, says Mr Mandelson's return is "extraordinary" and the reshuffle has been driven more by a "political strategy than an economic strategy".
16:40: The government's new economic decision-making committee - the National Economic Council - will meet regularly to focus on the "down to earth problems people are facing every day", the PM says.
16:35: Defending his decision to bring Peter Mandelson back, the PM says it was necessary to "set aside all issues in the past in the national interest", adding that his personal relationship with Mr Mandelson was "very good".
16:30: Gordon Brown hails Peter Mandelson's "brilliance and expertise", saying his role as an EU Trade Commissioner has given him "unrivalled experience" in key areas. The PM adds that "serious people are needed for serious times".
16:28: Alistair Darling outlines measures to give more protection to deposit holders and talks about moves to pour more money into the troubled money markets.
16:27: Gordon Brown says he is "reinventing government" to cope with the current financial challenges and that a "new era needs new ways of governing".
16:25: A team of top business leaders, including Sainsbury's and Vodafone and Paul Myners, the chairman of the Guardian Media Group and former chairman of Marks & Spencer, will advise the government as business ambassadors, the PM says.
16:23: Gordon Brown says we are not living in "ordinary times" and he has restructured the government to face up to the "new challenges" the country faces such as the financial crisis, rising food and fuel bills and the plight of the mortgage market.
16:22: Gordon Brown begins his press conference.
16:15: The media await Gordon Brown's arrival. The PM will be flanked by Chancellor Alistair Darling.
16:10: The No 10 machine is getting a makeover as well as the cabinet. Stephen Carter, the former ad executive brought in a year ago to shake up the way Downing Street operates, is to leave his job after rumours of ructions within Gordon Brown's circle of advisors. He will become a broadcasting minister in the House of Lords.
16:05: The countdown is on to Gordon Brown's press conference, expected to start in about ten minutes. There won't be many prizes for guessing the first question he will be asked. The media will want to know why he has brought Peter Mandelson back into the cabinet and whether his unlikely return means the well-documented animosity between the two men down the years is now at an end.
15:50: Assessing the full make-up of the cabinet, James Landale says it marks a return of many of Labour's old guard to bolster what was seen as a ministerial line-up that was too youthful. The reshuffle is also notable for the fact that many Blairites - Peter Mandelson and John Hutton among them - have been given key roles.
15:40: Official details of Gordon Brown's new cabinet have finally been released. Changes not already reported will see Tony McNulty move from the Home Office to minister of state in the Work and Pensions department and Caroline Flint move from the Communities department to the Foreign Office as Europe minister, both attending cabinet. In another surprise move, the businessman Lord Drayson returns to the government nine months after stepping down to compete in the Le Mans car race as minister of state for Universities and Skills. Baroness Royall is to replace Baroness Ashton as Labour's leader in the House of Lords while Beverley Hughes will attend cabinet as a minister of state in the Schools and Families department.
15:35: The BBC's Martha Kearney says she detects the hand of Alistair Campbell in Friday's comings and goings at No 10. Tony Blair's spin doctor regretted the manner of Peter Mandelson's second cabinet resignation, she believes, and is now keen to get as many heavy hitters back into the government to try and take the fight to the resurgent Conservatives.
15:20: More details emerge about Liam Byrne's new role. He will be a minister of state in the cabinet office, attending cabinet meetings. His focus is expected to be on co-ordinating policy across a range of key issues and could play a key part in helping push some of the government's more controversial legislation through Parliament.
15:10: Europe minister and Glasgow MP Jim Murphy has been appointed the new Scottish Secretary, the BBC understands. Des Browne was asked to stay on in the role, and may also have been offered responsibility for Northern Ireland as well, but declined, opting instead to leave the government.
15:00: We have just heard from a beaming Peter Mandelson. Next, we will hear from the man who has shocked Westminster by bringing him back into the domestic political spotlight. Gordon Brown is due to give a press conference at around 16.15 where he will be quizzed about Mr Mandelson's return and other ministerial changes.
14:55: Peter Mandelson arrives in Downing Street, telling the assembled reporters that it is "third-time lucky" for him. He says he is "very proud" to serve in Gordon Brown's government and, referring to the tough economic conditions, he says it is "all hands on deck". He adds that Gordon Brown is doing "an exceptionally good job" in "very challenging conditions".
Peter Mandelson could not hide his pleasure at his return to government
14:50: Margaret Beckett is to become housing minister, replacing Caroline Flint. In this role, she will attend cabinet. In another move, home office minister Liam Byrne is to become cabinet office minister. We are expecting a statement soon from Peter Mandelson.
14:40: Nick Robinson confirms that Damian McBride, Gordon Brown's chief spokesman, will be replaced by Justin Forsyth. Mr Forsyth once worked as head of policy for Oxfam and has advised both Tony Blair and Gordon Brown on aid and international development issues. Nick says he is expected to be less close to the press pack than his predecessor.
14:08: The pictures of Peter Mandelson have just been broadcast on the BBC News Channel: Here's a screen grab - that's Mandelson in the car, talking on the phone as his window is wound up.
Peter Mandelson is driven off as BBC news crew approaches
13:57: More details from Norman - apparently Mandelson was talking on his mobile phone on the corner of Downing Street before his car arrived. He got in and wound up his window just as the BBC's camera crew arrived.
13:46: Peter Mandelson has been spotted getting into a taxi in Westminster. He did not respond to a question from sharp-eyed BBC political correspondent Norman Smith.
13:40: The novelist and former political journalist Robert Harris is an old friend of Peter Mandelson. He told Radio 4's The World at One that he spoke to him yesterday, when the possibility of a return to British politics and the cabinet was being discussed: "I'm extremely surprised. I never thought for a second he'd return to front-line British politics, but I think these are difficult times and it's all hands on deck.... I think what it says to me is that the economic conditions are likely to get extremely tough next year, and that Gordon Brown is willing to reach out to virtually anyone to try and help steer the country through it."
13:25: There had been reports that ex-Sun editor David Yelland was to take over as No 10's spin chief. Sources have assured the BBC that it is not true.
13:20: In their first response to this morning's changes, the Conservatives have described the reshuffle as "bizarre" and accused Gordon Brown of a "stunning failure of judgment" in restoring Peter Mandelson to cabinet. Shadow foreign secretary William Hague said the PM had "achieved the impossible and made the government even more dysfunctional".
13:10: Northern Ireland Secretary Shaun Woodward says Peter Mandelson's return will bring "huge experience" to the cabinet and shows Gordon Brown is "determined" to have talented people by his side.
12:53: The Leader of the Lords, Baroness Ashton of Upholland, is to replace Mr Mandelson in Brussels.
12:45: Friends of Peter Mandelson celebrate his return. The author Robert Harris says "not even his worst enemy would deny" that he had been a success in his previous cabinet posts. And former Labour speechwriter Derek Draper says he believes Mr Mandelson's critics will be "pleasantly surprised" about the contribution he will make to the government.
12:35: This from the BBC's Europe Correspondent Jonny Dymond on Peter Mandelson: Both Britain and France have cause to mourn Peter Mandelson's departure from the European Commission; Britain because he is a big hitter and a good communicator in a Commission that is short of both; France because it will now have to find a new hate-figure at EU headquarters. He has expressed qualified enthusiasm for life in Brussels, rolling his eyes at some of the eye-popping tedium and exhausting his staff with his international schedule. But his passion remains British politics, which is where most conversation tends to wander back to.
12:10: More criticism of Peter Mandelson's return. Ian Gibson, MP for Norwich North, says the appointment is a "backward step" and will be unpopular on Labour's backbenches. And Kevin Maguire, from The Mirror, says Mr Mandelson "embodies lack of trust in politics".
11:55: With Peter Mandelson on his way back to Westminster, speculation is growing about who will replace him in Brussels. The BBC's Mark Mardell says that Mr Mandelson's replacement as EU Trade Commissioner will be a woman. Margaret Beckett and, almost certainly, Jacqui Smith can be ruled out. But that leaves Hazel Blears, Yvette Cooper, Baroness Amos, Baroness Ashton and Baroness Shriti Vadera, who is close to the PM and has a strong business background.
11:30: Former Home Secretary David Blunkett describes Peter Mandelson's return as a "masterstroke". But John McDonnell is extremely unhappy, telling the BBC it will "ruin" the reshuffle and "undermine" the credibility of the government.
11:25: Plans for a possible merger of the Scottish, Welsh and Northern Irish departments to create a "ministry of the nations" have been put on hold, James Landale says. Shaun Woodward is to stay as Secretary of State for Northern Ireland but we are still waiting to hear who will replace Des Browne as Scottish Secretary.
11:20: Reaction to the changes is coming thick and fast. Graham Stringer, one of the MPs who has called for a leadership challenge to Gordon Brown, said the reshuffle would bring more experience to the cabinet and reflect "different strands" of thought within the party. He said it showed the PM was prepared to "start again" after a "terrible year". But the Lib Democrats have criticised the changes, saying Gordon Brown was "deluded" if he thought Peter Mandelson's return would convince people Labour "still has what it takes to govern".
11:11: It is confirmed - cabinet office minister Ed Miliband will be secretary of state at the new energy and climate change department.
11:10: Ed Miliband is tipped to take the role heading up the new energy and climate change department, the BBC learns.
11:05: Peter Mandelson's return is already ruffling feathers in the Labour Party. Backbencher John McDonnell has said the Labour movement will be "perplexed" by the shock move and regard it as "extraordinary step backwards" for the party.
10:50: This reshuffle isn't just about personalities. A new department is being created to deal with the pressing challenges of energy security and climate change. It will combine the energy responsibilities of the business department and the climate focus of the environment ministry. It is not clear who will be heading the department yet but he or she will have a seat at the cabinet table.
10:35: The BBC's Nick Robinson says he is "gobsmacked" about the news of Peter Mandelson's return. He says Gordon Brown may have been stung by accusations that he lacked political courage and decided on a move that will shake up people's perceptions of the government.
10:30: Hilary Benn is set to stay put as Environment Secretary despite speculation he was on the move. But James Landale believes some sort of restructuring is under way involving the business and environment departments.
10:25: Political commentator Matthew Parris says Peter Mandelson's return is a shrewd move as he will be a competent, strong minister.
10:10: News of two departures. The BBC confirms that Defence and Scottish Secretary Des Browne is to leave the government. Also it is being reported that Gordon Brown's chief spokesman, Damian McBride, is to move to a less high-profile role and will no longer brief the media.
10:06: Another return beckons. The BBC's John Pienaar understands that Margaret Beckett is to return in the new role of cabinet enforcer. Other moves could see Nick Brown become chief whip and Geoff Hoon become transport secretary.
10:00 Peter Mandelson's surprise return is set to dominate this reshuffle and tomorrow's headlines. James Landale says Mr Mandelson will bring huge experience of international trade and finance issues amid the current global economic turbulence. However, he also bring some risks with him having already had to quit the cabinet twice. The personal dynamics of this move are also fascinating. Mr Mandelson and Mr Brown have been far from the best of friends over the years but James says the long-standing feud between the two men is clearly now over.
0955: John Hutton is leaving the business department to go to defence, the BBC learns. Peter Mandelson is tipped to replace Mr Hutton at business.
0950: There is a flurry of speculation about where Peter Mandelson could be heading. Could it be the business or defence departments? Mr Mandelson is no longer an MP and has a year of his term as a EU commissioner remaining. James Landale says news of Mr Mandelson's return is "amazing". He also confirms that Geoff Hoon will be remaining in cabinet and not going to Brussels.
0940: Gordon Brown has left Downing Street for a memorial service in Luton so any announcement could be delayed for a while.
0930: Here's some news completely out of leftfield - Peter Mandelson is to return to government in some capacity. The EU commissioner resigned twice from Tony Blair's government but could it be third-time lucky for him under Gordon Brown? It is being reported that Geoff Hoon will replace Peter Mandelson in Brussels but this, we stress, has not been confirmed.
Peter Mandelson's return will dominate the headlines
09:15: Sky News says it expects about six Cabinet positions to change hands. It adds that Lord Rooker will step down from his position as deputy leader in the House of Lords, a move also predicted by several newspapers this morning.
09:00: Some concrete news but not about the reshuffle. James Landale says Gordon Brown will call on a group of senior businessmen to advise the government on handling the financial crisis and spreading the message abroad about the stability of the financial system. Sir John Bond, chairman of Vodafone, will be among those brought on board. On a political front, Liam Byrne and Tony McNulty are among the ministers whose names are being consistently linked with key promotions.
0855: Gordon Brown has finalised his changes, the BBC learns, and the ministers involved are now being told of their fate.
0845: The BBC's James Landale says the changes at middle ranking levels will be more substantial than initially thought. Gordon Brown, he adds, is also looking to restructure some departments to "reconfigure" the government to deal with the financial crisis. James also urges caution about speculation that Hilary Benn could leave the cabinet, saying that this is far from certain.
0840: In a surprise move, former foreign secretary Margaret Beckett is being tipped in some quarters to return to a front line role. This may happen today or, more likely, in a more far-reaching reshuffle early next year.
0830 Friday: Anticipation is really growing now with speculation that the reshuffle could be announced in the next hour or so. Friday's newspapers are full of stories of likely changes in personnel and even departmental mergers. Predictions include a ministerial job for Jon Cruddas, who came third in Labour's deputy leadership contest last year, possibly at housing. Gordon Brown is also tipped to create a new role of policy enforcer to help push through controversial legislation such as the 42 day pre-charge detention. Ministers strongly tipped for promotion include Caroline Flint, Ed Miliband and Liam Byrne. However, according to Fleet Street the future of Hilary Benn, Geoff Hoon and Des Browne seems less certain.
2223 Thursday: Some drama, as Ruth Kelly reveals she will stand down as an MP at the next general election.
2050: Home Office Minister Liam Byrne has received much attention as a possible for promotion to the cabinet. Yet word is going around that his colleague, the tough-talking Tony McNulty, could be about to make the step-up, possibly to chief whip, if Mr Hoon moves on. It sounds like a neat arrangement, and therefore is very plausible for hacks, but Downing Street is saying nothing.
2035: Could this be the image of the day? Chief Whip Geoff Hoon, himself the object of much reshuffle-related speculation - including reports he might become a European commissioner - gives a shrug to reporters as he leaves Downing Street. He has said he wants to remain in the cabinet, and the smart money seems to be on that happening. But you never know.
1840: It's all gone a bit quiet on the reshuffle front, with the media's main focus on Sir Ian Blair's resignation as commissioner of the Metropolitan Police. The first editions of Friday's newspapers, available later this evening, might throw some further illumination on Mr Brown's intentions.
1740: Could backbencher Graham Allen be replacing David Miliband? I wouldn't put the mortgage on it. A colleague tells me that, when the Nottingham North MP visited Number 10 earlier, he was asked whether he had been offered a cabinet post. Beaming broadly, with tongue firmly in cheek, he replied: "Foreign secretary, but I turned the job down." Nice to see someone keeping a sense of humour during these tense times.
1725: After Lord Jones' departure, might there be another "Goat" (government of all the talents member) in the offing? David Yelland, former editor of The Sun, has been into Number 10. He refused to answer reporters' questions. Maybe he was just there for a reception.
1636: Sky is reporting that sources at the Department for the Environment, Food and Rural Affairs expect Hilary Benn to leave in the reshuffle. Such a move has been rumoured for several days around Westminster.
1625: My colleague Iain Watson told me, before heading off to cover Sir Ian Blair's resignation as Met police chief, that Liam Byrne is head of the list of those tipped to be promoted to cabinet. Jim Murphy is another being tipped for a move up the rankings. Some newspapers say Jon Cruddas, who ran as the leftiest candidate in Labour's deputy leadership contest, could be on his way onto the government payroll. Iain also says sources have told him there may be more "outside experts" brought in, though not as direct replacements for the ex-CBI chief Lord Digby Jones.
1620: Another MP to be seen heading into Number 10 today has been Graham Allen. He has not been mentioned in reshuffle speculation, as far as I can tell, and he may well be there on other business. If not, you read it here first.
1615: So far today those cameras have captured Ruth Kelly, as mentioned, heading into No 10. Perhaps more significantly John Hutton - the Blairite tipped by the Daily Telegraph amongst others as likely to be moved from the business secretary job has also been in. He left poker-faced. Chief whip Geoff Hoon, tipped last week for a move to Europe, has also been in.
1610: It's traditional at reshuffle time for ministers to head into Downing Street to hear the good - or bad - news, even though conversations can always be had by phone. Nonetheless TV crews outside No 10 have been recording all the comings and goings. They may be attending routine meetings - but they might also be about to get a Dear John letter from Gordon.
1605: To fill in a bit more of the story so far - Downing Street sought to play down speculation of a reshuffle taking place on Thursday, telling reporters in the morning lobby briefing that Gordon Brown was "very focused on other issues". But the BBC understands that Ruth Kelly was in Downing Street this morning for a "leisurely chat" with Gordon Brown, at the prime minister's instigation, suggesting that changes are afoot.
1602: There had been speculation of mass resignations or a big reshuffle after the murmurings about Gordon Brown's leadership over the summer. But it now seems that the financial crisis - and a relatively successful Labour conference - have lessened that likelihood, with most changes likely among middle and lower-ranking ministers.
1600: The story so far: Just a day after the party conference season ended, the prime minister is setting about reshuffling his front bench. We already know Transport Secretary Ruth Kelly is going. She says she wants to spend more time with her family. Trade Minister Lord Jones - not a Labour member but brought in last year to form part of Gordon Brown's "government of all the talents" - has also told the BBC he will be stepping down.