Andrew Grice: Don't believe the spin – the PM didn't get what he wanted

Inside Politics

"Is this the end?" one of Gordon Brown's closest allies was asked as he helped the Prime Minister contain the fall-out from the bomb lobbed into Downing Street by James Purnell's resignation. "Not yet," the aide replied.

The answer was right on two levels. "Not yet" because Mr Brown is still standing – just – after rushing out his cabinet reshuffle yesterday. But also "not yet" because the end may not be far away.

Mr Purnell emailed his resignation to Downing Street at 9.53pm on Thursday night. He then telephoned Mr Brown to break the news, only a couple of minutes before an already-alerted Sky TV flashed the news to the nation. The Prime Minister's anger that three newspapers had been told before him was palpable.

Forget the spin: this wasn't the cabinet reshuffle the Prime Minister had planned. He now has to plot Britain's recovery out of recession with a Chancellor he didn't want in the post. The official line is that Mr Brown had not made up his mind about who would run the Treasury. But it was increasingly clear he intended to give Ed Balls his promotion to the job he covets. Mr Darling wanted to stay put and eyeballed the Prime Minister, who blinked first. He could not afford another damaging walkout by a senior cabinet minister.

The once-close Brown-Darling relationship is at breaking point. The Chancellor felt that Mr Brown was using the controversy over his expenses as an excuse to prise him out of the Treasury. Mr Darling stood up to Mr Brown in his April Budget by opposing a second fiscal stimulus and rejecting pressure to include more optimistic economic forecasts. Mr Brown believed Mr Balls would have been more effective than Mr Darling in taking the economic fight to the Tories at the general election. Now they are stuck with each other.

Downing Street was anxious to stress there were only two cabinet-level "protest resignations" – Hazel Blears and Mr Purnell – while others who departed, such as Jacqui Smith and John Hutton, backed Mr Brown.

Like Mr Purnell, Mr Hutton has had grave doubts about Mr Brown. Both men agonised about whether to quit last autumn, before the Prime Minister, against the odds, steadied the ship with a reshuffle.

The star turn then was his old foe Lord Mandelson, whose unexpected return to the top table steadied Blairite nerves. He has been performing the same role for Mr Brown, as well as acting as a spokesman in media interviews to belie the impression the Government is imploding.

Lord Mandelson got his reward in yesterday's reshuffle, becoming First Secretary, formalising his current role as Mr Brown's consigliere. Lord Mandelson's Department for Business (what he calls his "day job") is also expanded.

The other eye-catching appointment was the promotion of Lord Adonis, an arch-Blairite, to the Cabinet. But there wasn't quite the magic trick Mr Brown pulled off last October by recalling Lord Mandelson. Sir Alan Sugar is a household name but making someone who is already a government adviser its enterprise tsar is not going to transform his fortunes.

It could have been worse for Mr Brown. For the moment, Mr Purnell looks isolated and disappointed that other senior Blairites – such as his friend David Miliband – have not joined him. But if Mr Brown is toppled, Mr Purnell's exit will look more clever than it does today.

He would have backed Mr Miliband if he had stood against Mr Brown last year. But since the Foreign Secretary's campaign went off at half cock, modernisers have been buying Purnell shares and selling Milibands.

Although he insists he is not running for the leadership now, he might be then. It was no coincidence, say Brownites, that Mr Purnell's contribution to the constitutional reform debate after the MPs' expenses scandal was to call for the state funding of political parties. "He knows he could never become leader while the trade unions have a third of the votes, but you could only get rid of that if they didn't provide most of our money," one minister told me.

If Mr Brown manages to hang on by his fingertips and then loses the general election, Mr Purnell will be well placed to say "I told you so". For now, Mr Brown would settle for the chance to lead his party into next week, let alone the next election. He has won a respite. But the Labour backbench mutiny is stronger than it was last year. Is he safe? Not yet.