Peter Mandelson has undermined the Cabinet truce on the euro with inflammatory comments suggesting Tony Blair has been out-manoeuvred by his chancellor.

Mandelson, a fervent euro supporter, told a lunch of women journalists in an off the record briefing that Blair is losing his battle to hold a referendum on the single currency during this parliament because he is not as "obsessive" as Gordon Brown.

He claimed prime minister would win the concession of returning to the issue before the general election because it would be a "disaster" for government otherwise.

But the chancellor is "politician right down to his fingertips, 24 hours a day, seven days a week" in a way that Blair is not, Mandelson claimed.

"If he was as obsessed with politics, he would not have let himself be out-manoeuvred by the chancellor in the way that he potentially has," said the Blair loyalist.

The Downing Street neighbours have done their best to present a united front on the issue in recent days, despite their much documented differences.

Shadow chancellor Michael Howard said the spat showed "how vicious and personal the infighting in Labour has become".

"It is quite clear that the fudged decision Gordon Brown makes on June 9 is going to be dictated by Labour's infighting, not what is best for Britain," he said.