Hundreds of documents relating to Peter Mandelson’s appointment as ambassador to the US are expected to be released by Downing Street on Wednesday.

The first tranche of files will include a two-page due diligence report by the Cabinet Office, which is likely to raise questions about Keir Starmer’s judgment, the Guardian understands.

Sources said it had warned Starmer of the serious “reputational risk” of going ahead with Mandelson’s appointment in December 2024 given his links with convicted sex offender Jeffrey Epstein.

Officials said the document could prove “very difficult” for the prime minister and warned that his response at the time – reportedly asking former chief of staff Morgan McSweeney, a friend of Mandelson, to seek and explanation from him about its contents – could be seen as “completely inadequate”.

The documents being released are the first batch of tens of thousands of files and are expected to contain information that was publicly available at the time, such as newspaper reports that showed the extent of Mandelson’s relationship with Epstein.

It will include correspondence between Cabinet Office, Downing Street and Foreign Office officials about Mandelson, who was sacked from his Washington role last September. Mandelson, 72, resigned from the Labour party and the House of Lords in February after the release of the Epstein files in the US.

There will be a statement from the chief secretary to the prime minister, Darren Jones, about the contents of the release after prime minister’s questions.

Last month, MPs ordered the government to release thousands of documents relating to Mandelson’s appointment after questions over how the peer was vetted.

He was arrested last month on suspicion of misconduct in a public office after allegations that he leaked confidential information to the disgraced financier while serving as business secretary in Gordon Brown’s cabinet.

The former Labour grandee was later released from his bail conditions, although he remains under investigation.

Mandelson has denied any wrongdoing, including misconduct in public office. He has apologised to Epstein’s victims for remaining friends with him.

The government has agreed a framework with the Metropolitan police on which documents can be released without prejudicing the police investigation into Mandelson, according to parliament’s intelligence and security committee.