Alan Milburn has denied that his return to government amounts to a calculated snub to the chancellor.

The prime minister has put the former health secretary back into the Cabinet, with special responsibility for Labour's election campaign.

The appointment is being seen as a blow to the chancellor, who earlier this week saw key ally Andrew Smith resign from government.

In previous elections the chancellor has played a pivotal role and his protege Douglas Alexander was set to mastermind the forthcoming campaign.

In a bid to quell a rift at the heart of government, Milburn said Gordon Brown was a "towering figure" insisting it would be "cloud cuckoo land" to suggest he would not play a key role in the election campaign

Milburn's appointment follows days of briefings by those both Blair and Brown camps.

Relations

It has also led to renewed speculation that relations between the prime minister and his chancellor have hit a new low.

Speaking before his first Cabinet meeting in his new post, Milburn dismissed claims that Brown had been sidelined.

"What has changed is that the prime minister has decided that I should be in charge of general election planning, the overall strategy and policy presentation and, crucially, the formulation and development of policies that will eventually lead, through the proper process, to a Labour manifesto in the next general election," he told the BBC's Today programme.

"But it is not a one-man job or a one-man show. As the prime minister was stressing, this is a team game and we have a team and I want to work with all the talents in the Cabinet, whether that is Gordon or John Prescott, Ian McCartney, David Blunkett, Tessa Jowell, John Reid or Margaret Beckett.

"These are all people I want to work with. We are all part of one team and that is Tony Blair's team."

Milburn and Brown have, however, had a fractious relationship over recent years.

They clashed over foundation hospitals after the then health secretary proposed that the arms-length bodies be given borrowing powers and complete financial freedom which Brown feared would break up the NHS.

No red box

Quizzed over whether the chancellor would brood inside the Treasury following the move, Milburn added: "That's not, I don't think, the position Gordon will take. I hope it isn't the position Gordon will take.

"I want to work very closely with Gordon. I am sure that I will be working very closely with Gordon, and with Ian McCartney and all the other key figures, not just in the Cabinet but in the party."

The minister, who formally takes the role of chancellor of the Duchy of Lancaster in order to secure a place round the Cabinet table, has also confirmed that he would have refused a departmental portfolio.

"If Tony Blair said he wanted me to do a red box job, I would have flatly refused, because it made it impossible to balance my family responsibilities," Milburn said.