Housing secretary Steve Reed has insisted Sir Keir Starmer’s position as prime minister is secure – despite his leadership being under growing pressure from Labour MPs.

But asked if Sir Keir’s position was secure, Mr Reed said: “Of course it is.”

“What’s gone on here is that Peter Mandelson, we now know, lied absolutely to everybody,” he told the BBC.

“He lied about his relationship, the depth of it, the extent of it, with Jeffrey Epstein. He made out it was pretty much nothing….but as soon as the prime minister found out the truth, he acted with decisiveness and integrity, and he sacked Peter Mandelson as the US ambassador.”

Lord Peter Mandelson “conned everybody,” Cabinet minister Steve Reed insisted as he sought to stress the Prime Minister and his chief of staff Morgan McSweeney were not “at fault”.

The Housing Secretary – a loyalist of Sir Keir Starmer – told Sky News: “The person at fault here is not the Prime Minister or his team.

“It is Peter Mandelson who lied, manipulated and deceived everybody, including the media, actually, because he was on the media an awful lot as well. He conned everybody.

“What matters is what you do when you find out what’s gone wrong. And the Prime Minister couldn’t have been more decisive. He sacked Peter Manson at 5am in the morning as US ambassador months ago.”

Mr Reed said he felt like he had “been punched in the stomach” when he found out about Lord Mandelson’s dealings with convicted child sex offender Jeffrey Epstein from the documents released by US authorities.

The mood among Labour MPs has increasingly darkened since Sir Keir Starmer admitted during PMQs that they had been aware of Mandelson’s friendship with the convicted paedophile when appointing him to the Washington job.

“It’s just indefensible,” said one backbencher. “They knew all about Peter’s relationship with Epstein but gave him the job anyway.

“It’s like Chris Pincher on steroids,” they told The Guardian, referring to the scandal that eventually brought down Boris Johnson. “The moment Keir admitted it then that was it – it’s over.”

Another former minister said: “We were meant to be the ones who didn’t do this stuff. It’s time for a fresh start, the sooner the better.”

The files also suggest that Lord Mandelson tried to secure a Russian visa for Epstein, with an email exchange showing Epstein asked how he could get a visa, to which Lord Mandelson responds that “Ben can get visas thru OD”.

This is thought to refer to Benjamin Wegg-Prosser, the co-founder of Lord Mandelson’s lobbying firm Global Counsel, and Russian oligarch Oleg Deripaska.

Mr Deripaska hit the headlines in the UK in 2008 when it emerged he had hosted then shadow chancellor George Osborne and then European trade commissioner Lord Mandelson on his superyacht off Corfu.

Labour peer Lord John Hutton, who served as a Cabinet minister under Sir Tony Blair and Gordon Brown, said he thought the handling of the scandal could mark the end of the Sir Keir’s time in office.

He told LBC it is “clearly” the end of Lord Mandelson’s career, but added that “it could well mark the end of the Prime Minister’s time in office”.

He said he expected Labour MPs would be having some “very serious reflections” on the direction of government and cast doubt on whether sacking chief of staff Morgan McSweeney would be enough to fix the troubles facing Sir Keir.

He added: “I don’t think the Prime Minister can be rescued by an avalanche of new parliamentary aides or aides in No 10. I think the change has got to come from the very top, not from the other ranks of the Government.

“And I don’t know whether that change is possible tonight. It doesn’t really look to me like it is.”

A Cabinet Officer minister has set out how documents relating to Lord Peter Mandelson will be released to the Parliament’s Intelligence and Security Committee (ISC).

Chris Ward said: “Release of information will be done, either through the Cabinet Secretary working with independent lawyers, or if the material is deemed to be potentially conflicting with national security or foreign relations, it will be handed to the ISC, who are independent. They can make the decision.

He added: “There will not be political involvement for ministers.

“There will not be political involvement from Number 10 in this process – this is the cabinet secretary and the ISC working with lawyers on it.”

He said some documents could touch on sensitive issues, including foreign intelligence and trade.

The controversy surrounding Lord Mandelson – who has quit the House of Lords, resigned from the Labour Party, been removed from the Privy Council and faces a criminal investigation following new revelations from the so-called Epstein files – has led to intensifying questions about Sir Keir’s political future.

Labour’s Mainstream group called for a “clean break” after the “betrayal” of the peer’s appointment to “one of the most powerful diplomatic posts on the planet” despite his friendship with Epstein being public knowledge.

The centre-left grouping, which is backed by Manchester Mayor Andy Burnham – long seen as a potential leadership rival to Sir Keir – said its members did not want to watch the party “succumb to the same old sickness” of “elite privilege, spin and toxic factionalism”.