Peter Mandelson has revealed that he has given face-to-face evidence to the Hammond inquiry into the "passports for favours" scandal which resulted in his resignation and rocked the government.

The meeting between the former Northern Ireland secretary and Sir Anthony Hammond QC took place on Monday at an undisclosed location - thought to be the Home Office.

Mandelson has vowed to clear his name, claiming that the home secretary, Jack Straw, had been wrong to call him "untruthful".

He remains confident that the inquiry will clear him of any wrongdoing although it is highly unlikely that even a "not guilty" verdict could result in him returning to frontline politics.

Mandelson was forced to leave the government last month after the prime minister told him his position was untenable following claims that he had misled the cabinet about his involvement in procuring a passport for the Indian tycoon Srichand Hinduja. He had initially claimed that a civil servant had made representations to the Home Office on his behalf, but later admitted he had called passports minister Mike O'Brien about the application.

Sources close to Mandelson have made it clear that he believes he was pressurised into resigning and have signalled that he does not rule out a political comeback. The affair, however, has been deeply damaging for the government and few of Mandelson's colleagues predict that he will return to frontline politics - despite suggestions that he would lobby to become Labour's next European commissioner.

Sources close to the prime minister moved last week to kill-off Mandelson's hopes of returning to the government, in an effort dubbed as an attempt to "rubbish" the one time close confidante of Tony Blair.

The government has said that it hopes the Hammond inquiry, set up by the prime minister in the wake of the affair, will report before the end of February.