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Howell James is a former PR adviser to Major's government as well as to the billionaire Hinduja brothers, who cost Mandelson his job as Northern Ireland secretary after allegations of acting improperly in their applications for British passports.

James, 50, is to be head of government communications as a permanent secretary.

A Conservative Party spokesman said: "It is strange that Labour should want the services of the man who masterminded the 1997 election campaign for John Major."

The Tories are also questioning the appointment of "a good friend of Peter Mandelson to such a sensitive post" and whether appointing another spin doctor to the permanent secretary role was the way for Downing Street to end the culture of spin.

The position was advertised in December promising an "attractive six-figure salary" for the job, which would be based in the Cabinet Office. The move came as part of the shake-up in the Prime Minister's PR team, which has come in the wake of Alastair Campbell's exit.

The appointment will bring to three who will share Campbell's responsibilities: Dave Hill, who joined from Lord Bell's Chime Communications to replace Campbell; plus the new permanent secretary and their deputy.

If it is James, he might be able to help the government in its relations with the BBC. He worked for the corporation as director of corporate affairs from 1987 to 1992, the year he went to work for Major.

The row about James's appointment comes as the true cost of spin by the Prime Minister's office has been revealed as £1.4m with the spend on the Number 10 press office more than doubling since Blair came to power.

The £1.4m spent by Blair on his press office compares with the £597,240 spent by his Tory predecessor John Major between 1996 and 1997, showing the importance that New Labour has placed on the spin machine.

According to Liberal Democrat Treasury spokesman David Laws the Prime Minister faces "serious questions" about the rise, which represents more than a 130% leap.

"This is not what taxpayers expect their money to be spent on. I hope that the Chancellor will look at the Number 10 press machine as part of his efficiency review and cut it down to size," Laws told the Daily Telegraph.

He added that some tough choices needed to be made to spend less on back-office bureaucracy and more on policemen, nurses and other frontline staff.

"If the Prime Minister wants to help the Chancellor cut waste he should start with his own office," he said.

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