PETER Mandelson was embroiled in a growing political storm last night over the passport application of an Indian-born businessman who donated £1m to the ill-fated Millennium Dome.

The Northern Ireland Secretary and MP for Hartlepool was under fire from all sides after he admitted asking a fellow minister whether the Dome donor's passport application would be reconsidered.

Downing Street initially denied he had raised the matter with then Immigration Minister Mike O'Brien while in charge of the attraction.

But Prime Minister Tony Blair's official spokesman admitted yesterday that Mr Mandelson had made the call on behalf of Srichand Hinduja.

Mr Hinduja and his brother confirmed they would underwrite the Dome's Spirit Zone - later renamed the Faith Zone - in the same month Mr Mandelson called Mr O'Brien, the New Millennium Experience Company revealed last night.

Mr Mandelson said he had done nothing wrong, a view endorsed by the Prime Minister.

Downing Street said: "Peter Mandelson has done nothing wrong and nothing improper."

However, there was fresh confusion when Mr Mandelson contradicted Downing Street suggestions he had forgotten the call, saying he simply had not been asked.

Conservatives and Liberal Democrats said the affair called into question Mr Mandelson's fitness as a minister - three years after he was forced to quit the Cabinet over the home loan controversy.

He also faced scorn from his own party with a Labour MP warning of widespread unease among backbench colleagues.

Mr Hinduja and his brother had already suggested financing the Millennium Dome's Faith Zone when Mr Mandelson intervened in June, 1998.

But the pair, facing possible arms deal corruption charges in India, did not put up the cash until later in the year.

An earlier application from the businessman had been rejected before Mr Mandelson approached the minister and asked whether it would be reconsidered following a change in immigration policy.

Mr Mandelson said he had not endorsed the new application but simply asked Mr O'Brien whether it could be resubmitted under the new rules.

The Home Office Minister told him it would be considered in the usual way, he said.

Mr Hinduja submitted his second application in March 1999 and received his passport six months later.

Both the Northern Ireland Secretary and Downing Street denied there was a conflict of interest and dismissed suggestions he should resign.

"If I had been asked to use my influence to endorse or to support somebody's passport application, that would have been different," Mr Mandelson said. "Those circumstances never arose."

But last night, Tory chairman Michael Ancram piled on the pressure, comparing the affair to the home loan scandal.

Mr Ancram said: "For the second time in three years, Peter Mandelson is revealed to have been less than candid in his explanation of his dealings with colleagues in relation to money or influence."

Even Labour backbenchers were openly critical of Mr Mandelson. Labour MP Bill Michie said: "There are many, including myself, who are fed up with high-flying Labour politicians cocking up the good record of the Labour Government by not knowing what they said or whether they said it.