Ms Gray, a former senior civil servant, stepped down as the Prime Minister’s £170,000 chief of staff in October following reports of a clash with other senior aides.

Rumours that she would be given a seat in the House of Lords by Sir Keir have circulated for weeks.

Others handed peerages include former shadow minister and MP Thangam Debbonaire (left) and Mary Bousted, the former joint general secretary of the hardline NEU education union.

Ms Gray’s three months in No10 were marked by regular reports of tensions within Sir Keir’s top team, while it was leaked that she was earning more than Sir Keir’s salary of £166,786.

The official, whose son, Liam Conlon, is a Labour MP, said she was leaving the chief of staff role in October because it was ‘clear to me that intense commentary around my position risked becoming a distraction’.

She was replaced as Sir Keir’s chief of staff by Morgan McSweeney, the apparent victor in a Downing Street power struggle.

He had previously overseen Labour’s victorious general election campaign and been the PM’s top political adviser in No10.

The ex-chief of staff was said to be taking a holiday before starting her new job as envoy, after she faced intense scrutiny in the media.

But six weeks later it emerged that she will now not be taking up the role as planned after her break from Government.

Ms Gray’s three months in No10 were marked by regular reports of tensions within Sir Keir’s top team, while it was leaked that she was earning more than Sir Keir’s salary of £166,786.

The Tories , for their party, handed peerages to Liz Truss ‘s former deputy PM Thérèse Coffey (left), ex minister Rachel Maclean and Toby Young (right), a political commentator and director of the Free Speech Union.

Ms Gray would have acted as a go-between for ministers with devolved governments in Wales, Scotland and Northern Ireland, and regional mayors across England.

But her future in the job was cast into doubt not long after she resigned as chief of staff, when she failed to appear at the first summit between the Government and leaders from Wales, Scotland, Northern Ireland and the English regions.

Asked why there were no plans to fill the role given it was previously described as ‘vital’ to Government, No 10 said Ms Gray had been ‘uniquely placed’ to hold the position and repeated that the role would be kept ‘under review’.

The House of Lords has some 800 members, most being life peers.

Since coming to power, Labour has started to enact reforms of the House of Lords promised in its election manifesto, including stripping out the remaining places for hereditary peers reserved in the upper chamber.

Adding more Labour peers would boost the party’s representation. Labour has 187 peers compared to 273 from the Conservative Party.

The Liberal Democrats have 78 and there are 184 crossbench peers.