PRWeek understands Carter was close to resignation last week following a series of talks with Brown.
The Prime Minister is said to have asked Carter to stay on in a less high profile role. A Downing Street insider said the precise nature of the role was still being discussed.
The talks followed pressure from MPs to end the turf wars between the ‘old guard' of longstanding Brownite advisors at Number 10, and the Carter-led ‘new guard'.
The Independent on Sunday revealed yesterday that former Brunswick CEO Carter was to step down from his current role. Downing Street sources eventually confirmed the story yesterday evening.
Labour Party sources said Carter had become increasingly frustrated by colleagues and Labour MPs briefing against him. One insider said: ‘He's been spitting bile to friends for a couple of months'.
The source added that Carter had initially been ‘putting his heart and soul in to the job' - including spending weekends at Chequers, the PM's country retreat: ‘It seemed to work for a couple of months and then the wheels came off again.'
Brown is now reported to be on the hunt for a replacement for Carter, but Downing Street is unlikely to turn to the PR industry this time.
Brown will instead look for ‘a politically motivated attack dog' as the Downing Street PR machine attacks Tory leader David Cameron and focuses on Brown's ability to deliver in tough economic times.