Peter Mandelson has been appointed as the next British ambassador to the United States as Keir Starmer tries to forge ties with Donald Trump.

Government sources last night confirmed the controversial Labour peer, nicknamed ‘the Prince of Darkness’ due to his Machiavellian manoeuvrings, will be installed in Washington following Mr Trump’s inauguration on January 20.

The prime minister previously said he believed the Labour politican had the necessary trade expertise and networking abilities to bolster the UK's interests during this delicate period of time.

It is a 'delicate' period that has seen frosty relations, with Mr Trump saying he would implement tariffs on goods coming in from the UK.

There is also the awkward issue of Foreign Secretary David Lammy's scathing criticism of the president-elect over the years, which has included calling him a 'woman-hating, neo-Nazi sympathising sociopath,' 'a tyrant in a toupee' and 'a dangerous clown'. 

Mandelson got the nod ahead of a string of prominent Labour rivals including former Cabinet ministers David Miliband and Baroness Amos. 

The Lord's expertise as a former EU trade commissioner could prove vital during what look set to be fraught discussions with the Trump administration over free trade.

He has held several other positions such as European Commissioner for Trade and has more recently been described as a 'significant influence' on the office of Starmer and a 'core part' of his network.

It was previously speculated by senior Labour insiders in November that if Kamala Harris were triumphant, Labour peer Valerie Amos would stand the best chance of being put in the position.

Although Lord Mandelson had said at the time 'nobody has spoken to me about it', the sources said he would be encouraged to take the role because he had the strength of character to deal with Trump - and the experience to handle the critical trade negotiations.

Mandelson previously ran to be Oxford University's next chancellor but was pipped at the post by Lord William Hague of Richmond.

He did not, however, rule out 'double-jobbing' at the time as Britain's next ambassador to the US while also serving as the university's chancellor.

The 71-year-old's entry into the role represents nothing short of a remarkable political comeback for a man who had to resign twice from Tony Blair’s cabinet before returning under Gordon Brown.

He also served as EU trade commissioner and was vigorously anti-Brexit, including running the campaign for a second referendum.

Lord Mandelson is an ally of Morgan McSweeney, Starmer’s chief of staff, and was backed for the role by Mr Lammy.

Last month he urged the PM to use Nigel Farage’s links to the Trump team as a ‘bridge’ to further the UK’s interests. ‘You can’t ignore him,’ he said. ‘He’s an elected MP, he’s a public figure. He’s a bridgehead, both to President Trump and to Elon Musk and others.’

Mr Trump has threatened to impose tariffs on all imports into the US, potentially triggering a major trade war. While China is his first target, the EU and UK could also be hit.

Sir Keir yesterday told MPs he wanted to avoid getting sucked into a trade war, adding: ‘We have to make sure we avoid tariffs.’.

The president-elect has also spoken warmly about Sir Keir and the special relationship, despite their political differences. Ahead of talks in New York in September, he described the PM as a ‘very nice guy’.

But, during the presidential campaign his team accused Labour of election interference after its head of operations said 100 current and former staffers were helping Mr Trump’s Democrat opponent Kamala Harris.

Dame Karen Pierce is the current ambassador to the US and she will remain in the post until the end of January when Trump is inaugurated.

In his role, Mandelson will be able to enjoy the new lavishly renovated British embassy in Washington and the ambassador's Queen Anne residence, which is the only building in North America designed by Sir Edwin Lutyens.

Speaking to the BBC previously, Lord Mandelson said he was 'more in favour of a new relationship rather than a special one' with the US.

He added: 'Can I just make the point if you don't mind: nobody has spoken to me about this job.

'I read about it in the papers but nobody has actually spoken to me about it, so let's put it to one side.'

Pressed on whether he would be interested in the Washington role, he said: 'I would be very interested indeed in giving advice about trade to whoever is appointed.'

Sir Keir has told the Commons Liaison Committee he is 'alive to the danger of tariffs' but would not 'speculate as to what the incoming president might do'.

He said: 'I am not a fan of tariffs and, therefore, we have to make sure that we avoid tariffs.'

Lord Mandelson was one of the architects of New Labour, helping to restore the party to power in the 1990s.

He served as business secretary and Northern Ireland secretary under Sir Tony, but then stood down as an MP in 2004 to become a European Commissioner.

He returned to government in 2008 when Mr Brown awarded him a peerage and appointed him business secretary.