Andy Burnham faces Labour rebellion if Shabana Mahmood appointed chancellor

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Burnham, who will be confirmed as Prime Minister on Monday, is poised to move the Home Secretary to the Treasury amid concerns that Miliband could become a focal point for criticism of the government.

Miliband has instead been tipped with a switch to the Foreign Office, with one Labour ally describing him as a potential "lightning rod for criticism".

But some Labour MPs have argued Mahmood - who is on the right of the party - lacks an economic plan and would alienate the Labour left.

Supporters of Miliband - who was an economic adviser under Gordon Brown before teaching economics at Harvard - had argued he is the only candidate with the experience and vision to revitalise Britain's economy.

Read more: Burnham to forge new path as Labour leader - with departing Starmer insisting: 'I go with pride'

Read more: Shabana Mahmood expected to beat Ed Miliband in race to become Burnham's chancellor

But business sceptics and some trade unions had balked at the prospect of Miliband entering the Treasury, warning his appointment could unsettle the markets.

The energy secretary is also opposed to drilling in the North Sea, which Burnham has said he is open to.

One Labour MP labelled the move to appoint Mahmood as "bizarre".

“It’s baffling a lot of people because nobody knows what her views are on the economy. Does she even have any? She’s never done a speech or intervention," the MP told The Times.

“Ed would have been a much more experienced chancellor because his original background was in finance."

"He was central to Gordon Brown’s team. It doesn’t bode well for the fundamental rethink of how we actually do government.” The point was reiterated by Rachael Maskell, a left-wing Labour MP, who praised Miliband as a unifying figure who had been able to bring the party together over issues like climate change.

However an ally of Mahmood, who worked as a shadow Treasury minister under Ed Balls, brushed off the criticism and said the home secretary was prepared to do what is right over what is popular.

The home secretary has divided Labour MPs with a series of hardline immigration reforms making it harder for people to stay in Britain and claim refugee status while making it easier to deport people with no right to be in Britain.

Mr Burnham's team have refused to comment on speculation and the Makerfield MP will only reveal his cabinet after July 20.

It comes as the Makerfield MP prepares to take the reins of Labour at a special party conference, ahead of becoming Prime Minister on Monday.

In his acceptance speech after winning the Labour leadership unopposed, he is set to promise a renewal of the Labour government, as well as setting out his vision for Britain.

He will announce his intention to take Britain down "a new path to the one we’ve been on for the last 40 years".

He will declare that under Thatcher's premiership, "Britain took a series of wrong turns in the 1980s" with power centralised and economic power privatised.