Disgrace and favour: David Blunkett still living in Belgravia residence despite second resignation

A fortnight ago it seemed that nothing would ever be the same again for David Blunkett when the storm over his business interests forced him to walk out of the Cabinet for the second time in a year. Gone was the power he had wielded as a senior minister. At a stroke his salary tumbled from the £130,347 commanded by a cabinet member to the £59,095 paid to the backbench MP for Sheffield Brightside.

But there is one consolation for him as he surveys the wreckage of his political career.

Thanks to the Prime Minister, he will be allowed to stay on in the luxurious grace-and-favour Belgravia home that he has occupied for the past four years.

The house, valued at up to £3m, is in a prime London location close to Hyde Park and Buckingham Palace and within walking distance of exclusive bars and restaurants. Similar properties cost up to £7,000 a month to rent.

Mr Blunkett was allowed to hold on to the property last year after resigning as Home Secretary over the "nannygate" furore, with Downing Street citing security reasons for the decision.

Tony Blair has taken the same view following Mr Blunkett's downfall as Secretary of State for Work and Pensions.

A Home Office spokesman said: "There are a number of former ministers who continue to receive special security arrangements after leaving office. So on this basis the Prime Minister has agreed that David Blunkett can continue to have use of the official residence while his security arrangements are reviewed."

The spokesman was unable to say how long Mr Blunkett's residence would continue, but the Tories suspect he could be staying on for months to come.

Chris Grayling, the shadow Leader of the Commons, said: "This is nothing more than the Prime Minister looking after one of his friends. Once a minister leaves the Government he should leave any official residence as soon as possible. David Blunkett is entitled to security, but there is no reason why it should take an indefinite period of time to put new arrangements in place."

The allocation of grace-and-favour residences is in the gift of the Prime Minister, who is said to take into account security considerations and the demands of the job before choosing the beneficiaries. As a former home secretary, Mr Blunkett qualifies on the first criterion, but has no claim on the second.

A spokesman for the Cabinet Office said: "David Blunkett told the Prime Minister two weeks ago that he would make the necessary arrangements to move out. As is normal in these circumstances he is being given a short period of time in which to do this. We are not going to comment on when this will be other than to say he has put the necessary arrangements in hand."

Last night, a spokesman for Mr Blunkett said: "He is going to move out of South Eaton Place as soon as he can find a property of his own. That should be within three months of his resignation, but if he finds somewhere it could be earlier."

Seven members of the Government enjoy accommodation at the taxpayers' expense. Tony Blair and Gordon Brown live in the traditional Downing Street homes occupied by the Prime Minister and Chancellor of the Exchequer. Mr Blair also frequently stays at the Chequers estate in Buckinghamshire.

Jack Straw, the Foreign Secretary, has two homes - a London residence in Carlton Gardens, off Pall Mall, and a country residence at Chevening, Kent.

The 18th-century Admiralty House on Whitehall is divided into three apartments, which serve as the London homes of John Prescott, the Deputy Prime Minister, Geoff Hoon, the Leader of the Commons, and Margaret Beckett, the Environment Secretary. Mr Prescott also has the use of Dorneywood, his official estate in Buckinghamshire.

Despite their official residences, most of them claim thousands of pounds in expenses for second homes, official figures last month disclosed.

Mr Blunkett picked up £20,608, while Mrs Beckett claimed £19,088 Mr Straw £17,780, Mr Blair £16,417 and Mr Prescott £14,166.

Portrait of a property

* The house in South Eaton Place is traditionally occupied by the Home Secretary. Before Mr Blunkett moved in it was occupied by Mo Mowlam because Jack Straw, the previous Home Secretary, did not want to live there.

* The house is estimated to be worth £3m. In 2002 nearly £100,000 was spent on the property, including £85,000 on refurbishment, some of it work to repair storm damage.

* Mr Blunkett has lived in South Eaton Place since 2001. He is said to believe the house may be haunted. He was reported to have complained of unusual noises after dark and a strange chill in some rooms.

* Former residents include Douglas Hurd and Michael Howard. Near neighbours include Elizabeth Hurley, Margaret Thatcher, Andrew Lloyd Webber, Roger Moore, Roman Abramovich and Nigella Lawson.