Government sources confirmed that the Foreign Office reached a financial settlement with Lord Mandelson, but have not said how much this was for.

However, he is believed to have been given an exit payment equivalent to three months’ salary according to the Times, external.

A Foreign Office spokesperson said: “Peter Mandelson’s civil service employment was terminated in accordance with legal advice and the terms and conditions of his employment.

“Normal civil services HR processes were followed. Further information will be provided to Parliament as part of the government response to the motion passed last week which is being co-ordinated by the cabinet office.”

While Lord Mandelson’s salary as US ambassador has not been disclosed, the post typically has a salary of £155,000-£159,999. This would put a three months’ pay-out at around £40,000.

His association with Epstein – and the fact he remained in contact with the financier after the latter was convicted – was known at the time of his appointment in December 2024.

However, the peer was sacked from the role after Downing Street said new information about the depth of this relationship had emerged – including emails showing he sent supportive messages to Epstein as he faced charges for sex offences in 2008.

Email exchanges in the latest US government release in January on Epstein included those while Lord Mandelson was a member of Gordon Brown’s cabinet.

Among them is one that indicates Lord Mandelson gave Epstein advance notice of a €500bn bailout by the EU to save the Euro in 2010.

Another included a 2009 memo in which Brown’s policy adviser Nick Butler wrote about the UK’s struggling economy and recommended selling off government-held assets to raise public funds.

The Metropolitan Police is currently investigating the peer over allegations of misconduct in public office.

Lord Mandelson has not responded to requests for comment but the BBC understands his position is that he has not acted in any way criminally and that he was not motivated by financial gain.

Deputy Assistant Commissioner Hayley Sewart said enquiries were ongoing.

“This will be a complex investigation requiring a significant amount of further evidence gathering and analysis. It will take some time to do this work comprehensively and we will not be providing a running commentary.”