LONDON (CNN) -- The embarrassing resignation of Trade and Industry Secretary Peter Mandelson was described Thursday as a serious blow to the British government.

Mandelson, credited with engineering Tony Blair's election victory as prime minister last year, resigned from the Cabinet on Wednesday over money he borrowed from a colleague to buy a house.

His resignation came in the wake of a disclosure that he failed to declare borrowing 373,000 pounds ($627,000) in 1996 from fellow legislator Geoffrey Robinson.

Mandelson did not disclose the loan, even though his own department was investigating Robinson's business dealings.

British newspapers quickly set about the task of dissecting the turmoil Thursday.

Some said it was the Labour government's darkest day, and predicted more damaging revelations to come. Others considered it a more mild setback for Blair's administration and forecasted Mandelson would return to the political forefront before too long.

The Sun, the country's biggest selling newspaper, ran the headline "Stuffed" above a photo illustration of Mandelson's head emerging from the neck of a Christmas turkey.

The Guardian's headline was a more optimistic "Goodbye ... for now."

The Daily Telegraph said it was Blair's most shattering blow to date.

"The immediate shock to Tony Blair's government is severe, but it must at least be given credit for a prompt resolution," added The Financial Times in an editorial.

One of Blair's closest confidants, Mandelson resigned after only 150 days as trade and industry secretary, saying that although he did not consider he had done anything wrong, it was important that the government be, and be seen to be, "whiter than white, absolutely squeaky clean."

Robinson resigned as paymaster general at the Treasury hours after Mandelson.

The Guardian said the resignations will prove that Blair's government is serious about rooting out suspect behavior, even if it can no longer claim to be immune from it in the first place.

The Express tabloid speculated on which political camp might have been the source of the Guardian story and said "the answer may determine whether the episode is remembered merely as a jolt to the government or a cataclysmic schism bringing down other major figures in its wake."

Robinson was controversial because of the way he used his wealth, and sheltered it from taxes; Mandelson because of his power and his closeness to Blair.

Labour has stumbled before on money matters. After Blair backed an exemption for Formula One racing from a proposed European ban on tobacco advertising in sport, it was disclosed that Formula One boss Bernie Ecclestone gave the party a million pounds ($1.7 million) before the election. Labour refunded his contribution.

Mandelson was born to politics. His grandfather, Herbert Morrison, was a member of Winston Churchill's war-time Cabinet and briefly foreign secretary under Labour Prime Minister Clement Attlee.

Mandelson won a seat in the House of Commons in 1992, and was promoted to the Cabinet earlier this year.