APP has been accused by environmental groups, including Greenpeace, of chopping down protected trees and endangering animals.
Mandelson set up Global Counsel with financial backing from WPP after losing his position as business secretary following the 2010 general election.
The consultancy’s policy is not to name clients but after enquiries by The Guardian, Mandelson confirmed the appointment.
Mandelson’s admission comes as peers are facing increased pressure from the House of Lords to disclose details of clients.
The firm said it is 'helping APP meet new EU rules requiring timber imported from Indonesia to be sustainably sourced’.
The Guardian reported that Mandelson has travelled twice to Jakarta in the past few months and held meetings with the EU ambassador there. The newspaper also stated that his staff have met members of the Indonesian government.
A Greenpeace list details that at least 67 companies, including Tesco and Kraft Foods, have boycotted APP since 2004.