The Prime Minister Gordon Brown is currently reshuffling the cabinet following the resignation of Ruth Kelly as Transport Secretary and full details have yet to emerge.
It is understood that Mandelson, who was forced to leave the Government under Tony Blair, is set to return to the cabinet for the third time in his political career.
It is reported that John Hutton, the current Business Secretary will become Defence Secretary and Des Browne will leave the Government.
It is not yet known if there will be any changes to the role of Secretary of State for Work and Pensions James Purnell, but reports claim he is likely to remain in his position.
The Chancellor Alistair Darling is expected to remain in his role and there are rumours that Housing Minister Caroline Flint is to be replaced by Margaret Beckett.
It is thought Flint may take up Ed Milliband’s position as Cabinet Office minister as he moves to take charge of energy and climate change.