Not every minister would have been quite so cavalier about being handed control of the levers of Downing Street power.

Most would have relished every minute of their chance to run the country while Gordon Brown was out of town. But Lord Mandelson appears happy to combine work and pleasure by standing in for the Prime Minister from his Corfu poolside.

The all-powerful First Secretary of State has taken over responsibility for the day-to-day operation of the Whitehall machine from Labour's deputy leader, Harriet Harman, who began her holiday yesterday. But he will not let the small matter of deputising for Mr Brown prevent him from enjoying the 30C temperatures on the Greek holiday island for the next two days.

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The result is that the heart of the British government has temporarily shifted this weekend 1,200 miles out of London to a villa with spectacular views of the Ionian Sea.

Lord Mandelson will not return to Britain until Monday. Aides will keep the sun-loving peer in touch with urgent developments via his BlackBerry and mobile phone – assuming he is not enjoying a dip in the water or an afternoon siesta.

They insisted there would be no need to organise an emergency flight home if a major crisis broke this weekend because Gordon Brown, who is on holiday a mere 420 miles away in his Fife constituency home, would step in.

But officials drew up a rota of Cabinet ministers to take charge throughout August to enable their workaholic boss to take a break.

The fact that Lord Mandelson, who was not even in the government last summer, has taken over while still in Corfu will be seen by admirers and detractors alike as fresh evidence of the huge influence he wields over the Brown administration.

His selection of holiday destination had already raised eyebrows, as his visit to the island last year provoked a political storm over the hospitality that he – and the shadow Chancellor George Osborne – received on board the yacht of the Russian oligarch Oleg Deripaska.

While Mr Osborne is steering clear of the island this year, Lord Mandelson flew out to Corfu last Monday. One fellow passenger reported that he was engrossed with his BlackBerry until the moment of take-off. He will be staying once again at the luxury villa owned by the Rothschild banking dynasty.

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Last year his old friend Nat Rothschild became embroiled in the "yachtgate" controversy after arranging for him and Mr Osborne to meet Mr Deripaska.

Ms Harman "signed off" from duty on Thursday afternoon. She has flown off for a family holiday in Italy after a controversial 10-day spell in which she blamed the male dominance of banking for the global financial crisis and warned that men "cannot be left to run things on their own".

Government sources confirmed that the baton had passed to Lord Mandelson yesterday morning, when he still had three days of his Corfu holiday to run. His assumption of control appeared to run contrary to a warning last month from Mr Brown to ministers that they could not be "on call" with their families at home.

A Downing Street memo to Whitehall departments last month stressed: "The Prime Minister wants business to be fronted by ministers and expects duty ministers to be on duty in London or on departmental visits at all times."

In fact it appears that the most senior minister currently on duty in the capital is Tessa Jowell, the Cabinet Office Minister.

Last night a Downing Street source said Lord Mandelson's presence in Corfu would not affect the smooth operation of government. Plans are being drawn up for a series of events next week to highlight government initiatives to boost industry.

The source said: "Gordon remains in charge. This week Harriet has been around in London to help with the heavy lifting. Peter will be around to help next week. People are on call on BlackBerries and mobiles – Peter can do that from Corfu; Gordon can do that from Scotland.

"The wonders of modern technology," he added, "are such that it doesn't make a difference where you are. It's not like there has to be someone sitting in London all the time. We have never had any trouble getting hold of Peter."

He pointed out that Jack Straw, the Secretary of State for Justice, had taken the decision to free Ronnie Biggs from prison although he was away on holiday. Mr Straw and Alistair Darling, the Chancellor, will also have a week each "minding the shop" during the Prime Minister's holiday.