Downing Street communications chief Tim Allan said he was resigning to make way for a new team to support the UK leader, a day after Starmer's closest aide Morgan McSweeney stepped down over Mandelson's ties to the late US sex offender Jeffrey Epstein.
With the Epstein revelations raising questions over Starmer's judgment and ability to govern, the prime minister addressed staff at his Downing Street office on Monday morning to again express his regret over the Mandelson appointment.
"We must prove that politics can be a force for good," he told them, praising McSweeney as "a friend" who helped change the Labour party and win the 2024 general election with one of the largest parliamentary majorities in the United Kingdom's modern history.
"I believe it can. I believe it is. We go forward from here. We go with confidence as we continue changing the country."
His spokesman later told reporters Starmer was focused on getting on with the job and had no plans to step aside, adding Allan's resignation happened after the staff meeting.
"The prime minister is ... getting on with the task of delivering change across the country," the spokesman told reporters, answering "no" when asked whether Starmer was planning to stand down.
Starmer was "concentrating on the job in hand," he said.
But the second resignation did little to calm the mood or quieten those voices calling on Starmer to quit.
The Press Association reported that Scottish Labour leader Anas Sarwar was set to call on Starmer to resign at a press conference on Monday afternoon.
Support for Labour in Scotland has slumped since the 2024 election, with some polls putting it in third position behind the Scottish National Party and the populist Reform UK.
UK government borrowing costs rose on Monday, reflecting investors' concerns that a more progressive Labour leader, who was willing to borrow and spend more, could take over.
"It's painful," said one Labour MP on condition of anonymity.
"It's like watching a fatal car crash in slow motion."
After deciding with McSweeney on Sunday that it was the right moment for the government aide to move on, Starmer had hoped to reset the narrative and attempt to return to an agenda he has so far failed to keep any focus on - tackling the cost of living crisis and boosting the UK economy.
The leader of the opposition Conservative Party Kemi Badenoch accused Starmer of being unable to run his government.
"He's like a plastic bag blowing in the wind. We need him to get a grip and if he can't do it then someone else in the Labour Party needs to do that, or they should have an election," Badenoch told Sky News.
The new scandal over Mandelson, who was sacked as ambassador to the United States in September, came after files released by the US Justice Department last month included emails suggesting Mandelson had leaked discussions on possible UK asset sales and tax changes to Epstein during the financial crash.
Mandelson has not commented publicly on allegations he leaked documents and did not respond to messages seeking comment.
with PA
