Ever since then there have been repeated reports - strenuously denied by Downing Street - that jealous rivals had launched a whispering campaign against her. On occasion, Ms Mowlam herself confirmed that such a campaign was being waged.
"This is a personal decision for me," said Ms Mowlam, who is standing down as an MP at the next general election and pursue a career outside parliament.
"I have had whispering campaigns for rather a long time and if I'd listened to them I would not be here now," she added.
Ms Mowlam was made Northern Ireland Secretary by Prime Minister Tony Blair in 1997 and steered the Good Friday Agreement through its difficult initial stages. But she but was replaced in October 1999 by Peter Mandelson when the peace process stalled.
She had a 15-minute meeting with the prime minister at Number 10 earlier on Monday morning. Downing Street said she would keep her job as Cabinet Office minister until the next election.
She said: "It is one that I have been considering for some time, and have previously discussed with the prime minister."
A Downing Street spokesman said Mr Blair believed she would be "a great loss to the government and a great loss to parliament".
Popularity rivalled Blair's
Ms Mowlam has consistently been one of the most popular ministers in Mr Blair's government since New Labour swept to power in May 1997.
Her popularity has rivalled that of Mr Blair - a fact rumoured to have alarmed and irritated the Labour leader and his close aides.
At the party's 1998 conference, mere mention of her name by Mr Blair during his own keynote speech sparked a spontaneous standing ovation - for her, not him.
Ever since then there have been repeated reports - strenuously denied by Downing Street - that jealous rivals had launched a whispering campaign against her. On occasion, Ms Mowlam herself confirmed that such a campaign was being waged.
That, combined with the leaked news of her decision to investigate financial possibilities of writing her memoirs, has led to her being dogged by speculation as to when she might quit parliament.
Downing Street dismissed as "24 carat rubbish" allegations that Ms Mowlam had been briefed against by anyone with the authority of the prime minister - or that Mr Blair was displeased at her unwittingly stealing the limelight during his speech.
Ms Mowlam's statement announcing her retirement sought to dispell suspicion that the experiences of office had caused her to become disillusioned.
"My commitment to the government and the Labour Party is as strong as ever," she said. "Between now and the general election I will continue to fight for the election of a Labour government."
She said she would "continue to pursue my many interests, including in international affairs, conflict resolution and poverty".
'Huge regard' - Blair
Of her decision to quit, the spokesman said: "This is something that Mo had indicated to the prime minister some time ago, but because of the recent speculation in the last few days she has decided to make this public now and put an end to it.
"The prime minister has a huge regard for her abilities and believes her undoubted talents lend themselves to a number of different areas, and that she still has a massive contribution to make."
For the Conservatives, shadow cabinet office minister Andrew Lansley said: "Politics will be the poorer for Mo's departure. We may have disagreed in many things, but I have never doubted her honesty, candour and ability to respond to people."
In contrast, Iain Paisley Junior, Democratic Unionist member of the Northern Ireland Assembly and son of the man Ms Mowlam reportedly swore at during a tense meeting when Ulster secretary, said there would be "celebrations" at the news among his community.
"It's just a pity it didn't happen sooner when she was secretary of state [for Northern Ireland]. Though it's a case of goodbye and good riddance."
Biography imminent
The most recent bout of speculation about Ms Mowlam's future centred around the forthcoming publication of a new biography of her, written by the veteran political journalist Julia Langdon.
The two are friends and the book is believed to lend weight to rumours that Peter Mandelson, the man who took over as Northern Ireland secretary when Mr Blair moved her from it, was a source of briefings against her.