Nick Clegg has leapt to the defence of Alan Milburn who was attacked by former Labour cabinet colleagues for agreeing to review the coalition government's efforts to boost social mobility.
The deputy prime minister said Mr Milburn, who had done "brilliant work" on the subject, would not be joining the Tory-Lib Dem coalition.
Instead he would be producing an annual report for MPs.
Lord Prescott called Mr Milburn a "collaborator" for accepting the role.
But Mr Clegg said: "Alan Milburn is not joining the government; he is not even being an adviser to the government.
"John Prescott's got his ermine in a twist about this and called him a 'collaborator'. That's hyperbole if there ever was some."
Mr Clegg revealed he had spoken on Monday morning to Mr Milburn, currently on holiday in Bali, about the role.
He said the former health secretary will report annually on efforts to improve social mobility across government and public bodies, including the NHS and universities.
Mr Clegg, who is attempting to raise the profile of Liberal Democrat policies as he stands in for holidaying Prime Minister David Cameron, said improving social mobility was one of the reasons he entered politics.
"We are a relatively affluent country but children are pretty well condemned by the circumstances of their birth.
"Basically, because of where they were born, who their parents were, where they lived, they are going to have less chance of living as long as they want to, of getting the education they want, getting the jobs they want.
"I think a liberal, open, opportunity society has got to be one where we remove barriers to social mobility so you can make of yourself and your life what you want to."
Mr Clegg said a team of civil servants would help Mr Milburn to produce an annual report "telling us how we are progressing on this long-term goal".
This would be submitted to Parliament and MPs would be able to debate the issue.
Mr Milburn undertook a major study on social mobility for Labour Prime Minister Gordon Brown before standing down from Parliament at the last election.
He is not the only senior figure from his party to offer advice to the current government.
Former welfare minister Frank Field is devising an anti-poverty strategy, while former Work and Pensions Secretary John Hutton is reviewing public sector pension provision.
Another Labour MP, Graham Allen, is also doing work for the coalition on early intervention for children from disadvantaged backgrounds.
It comes as the TUC publishes its own report on social mobility, which finds that in Britain 50% of a child's future earning potential is determined at birth, compared to less than 20 per cent in Canada, Australia, Denmark, Norway and Finland.
Education plays an important role in handing on advantage and disadvantage from one generation to the next, says the report, but real improvements in social mobility will not happen without cutting Britain's "high level of income inequality".
TUC General Secretary Brendan Barber said the coalition's planned public spending cuts would also reduce social mobility.