Gus O'Donnell, John Major's former press secretary, was last night announced as the new permanent secretary to the Treasury.

He will replace Sir Andrew Turnbull next month who moves to become cabinet secretary following Sir Richard Wilson's retirement.

O'Donnell served in Downing Street until 1994, after which he returned to the Treasury as executive director to the IMF and World Bank.

The FT reports the mandarin is "arguably Gordon Brown's closest Whitehall ally".