Sir Keir Starmer has accused officials in the Foreign Office of deliberately and repeatedly withholding the fact Lord Mandelson initially failed security vetting for the role of US ambassador.
Giving a statement to MPs, the prime minister said if he had known, he would not have gone ahead with the appointment.
Sir Keir found out last Tuesday the Foreign Office had gone against the recommendation of the security vetting agency and cleared Lord Mandelson for the job.
Conservative leader Kemi Badenoch has called for the PM to resign, saying he had "thrown his staff and officials under the bus" rather than "taking responsibility".
She accused Sir Keir of misleading the House of Commons when he previously told MPs "full due process" was followed during the appointment and said he should have corrected the record last week "at the earliest opportunity".
