The long-running political row over spending cuts shows no sign of fading after Lord Mandelson said investment in public services was always due to fall regardless of the recession.
The Business Secretary's claim that Labour's big spending on the likes of schools, hospitals and infrastructure had never been intended to continue indefinitely was dismissed as "spin" by the Tories.
Meanwhile Chief Secretary to the Treasury Liam Byrne accused the Conservatives of having a "no-hope strategy for the future" but was accused of hypocrisy by his opposite number Phillip Hammond.
And the Liberal Democrats faced internal problems after Nick Clegg came under fire from his own frontbench team at the party's annual conference over his proposals for spending cuts.
Plans to deal with the growing black hole in the nation's finances have dominated political debate over the summer, with Labour and the Tories seeking to draw battle lines ahead of the general election.
With Gordon Brown attending a series of international engagements in the United States, Lord Mandelson told The Economist that the Government had always been planning to cut back on the money it had ploughed into areas that had previously suffered from under-investment.
Insisting that Labour had been "wise spenders", he said: "Crisis or no crisis, we were never going to be able to sustain that continued rise in spending and investment that we have seen over the last 10 years - and did not need to be, given the huge catch-up that we had to undertake during that time."
The Tories have accused Gordon Brown of committing a U-turn over plans to slash public spending, saying he sought to mislead the public over planned cuts. Lord Mandelson conceded there had been a change in "optics" to counter what he dismissed as Conservative propaganda, but said the Prime Minister had always been clear that "tough choices" would be required as a result of the recession.
Mr Brown had also been "honest" about plans to halve the nation's deficit over four years, the Business Secretary added. "He has always said this but it has been convenient for some, who for whatever reason want to attack him, to present him as some sort of wild spendthrift who wants to carry on spending regardless of economic conditions," Lord Mandelson said. "That's not what he did as Chancellor of the Exchequer and it's not what he will do as Prime Minister."
