Derek Scott will work as an economic consultant with the auditing and tax specialist.

Mr Short’s departure may have been precipitated by several runs ins with Chancellor of the Exchequer Gordon Brown. He is rumoured to have clashed with Mr Brown over the £1.4 million pension cap.

No replacement for Mr Scott has yet been made, a No 10 spokesman said.

Mr Scott joins the exodus of Alastair Campbell, director of strategy and communications, and Jeremy Heywood, his private secretary, from the so-called “inner circle” of advisors.

Mr Heywood is to join Morgan Stanley in the new year.

Jonathan Powell, Mr Blair’s chief of staff, is also rumoured to be looking for another job.

Mr Scott has been Tony Blair’s chief economic adviser since 1997 and before that worked for other senior Labour politicians.

Between 1976-79, he was special adviser to former chancellor Denis Healey and subsequently for Jim Callaghan when he was Leader of the Opposition.

Mr Scott has also been director of European economics at BZW, chief economist at oil group Shell (UK), and international policy adviser for Shell International.

Fifty-six year old Mr Scott said of the new job opportunity: “I’m delighted to have this opportunity to advise Mike Rake and KPMG – and look forward to helping KPMG build on the leadership position it has globally.”

KPMG employs nearly 100,000 people worldwide in 148 countries.