Keir Starmer is to hand a dossier on Peter Mandelson to the police and legislate to strip the disgraced former minister of his peerage, after reports that he leaked market-sensitive information to Jeffrey Epstein at the height of the financial crisis.

Starmer told his cabinet meeting on Tuesday morning he was “appalled” by the reported leaks and had also asked officials to draft legislation to strip Mandelson of his peerage “as quickly as possible”.

The Cabinet Office has sent the Metropolitan police details about emails from the then-business secretary to the child sex offender.

Starmer’s spokesperson said the prime minister told cabinet that Mandelson had “let his country down”.

He added: “The public don’t really see individuals in this scandal, they see politicians. For the public to see politicians saying they can’t recall receiving significant sums of money or not was just gobsmacking, causing them to lose faith in all politicians and weaken trust still further. The prime minister said that was why moving quickly in this matter was vital.”

Fresh disclosures from the Epstein files appear to show Mandelson sent a string of emails to the late financier containing confidential information that the government was receiving to deal with the global crash while he was business secretary under Gordon Brown.

Starmer’s spokesperson said the Cabinet Office was reviewing all information it had regarding the documents but an initial review of the Epstein files released on Friday by the US Department of Justice found “they contain likely market sensitive information surrounding the 2008 financial crash and the official activities thereafter to stabilise the economy”.

He added: “Only people operating in an official capacity had access to this information in strict handling conditions to ensure it was not available to anyone who could potentially benefit from it financially. It appears these safeguards were compromised. In light of this information, the Cabinet Office has referred this material to the police.”

Starmer told cabinet ministers at a meeting this morning that “the government stands ready to provide whatever support and assistance” is needed.