The prime minister did not know Lord Mandelson failed security vetting for the role of US ambassador until earlier this week, the government has said.
A spokesperson said the decision to go against the recommendation of the vetting agency and allow him to take up the role was taken by officials in the Foreign Office.
Sir Keir Starmer has faced calls to resign over allegations he misled Parliament and MPs when he claimed "full due process" was followed during the appointment.
It came after the Guardian newspaper reported that Lord Mandelson was initially denied security clearance in late January 2025 but this was overruled by the Foreign Office to ensure the peer could take up the post.
Lord Mandelson was sacked as ambassador last year over his ties to the late convicted sex offender Jeffrey Epstein.
