The man once in charge of the Millennium Dome also warned that the High Speed 2 scheme was based on "flimsy evidence" and would "suck the very life blood" out of the rest of the country's rail network.
MPs are due to vote on the multi-billion-pound project next week with up to 60 Tory backbenchers thought to be prepared to vote against the Coalition Government.
In recent months, Labour have been noticeably less supportive of the proposed new rail line.
During his party conference last month, the shadow chancellor Ed Balls openly questioned whether the scheme was the best use of an estimated £50 billion of taxpayers' money.
But Labour frontbencher Lord Davies of Oldham yesterday reaffirmed support for a new high speed line. He told peers: "The Opposition supports HS2. We believe a new north-south line is needed. We didn't ask the nation to embark on this major construction because we wanted some kind of 'trophy' but because there is a real need."
Lord Mandelson had originally backed the HS2 plans but made a dramatic U-turn earlier this year following reports that the project's costs were escalating.
He said yesterday: "I think the sheer cost of (the scheme) will suck the very life blood out of the rest of the country's rail system."
And he said if the project went ahead there would be nearly £8bn of cuts in the existing intercity network.
HS2 is deeply unpopular with many Conservative MPs who fear a backlash from their constituents who are expected to suffer major disruption as the new train line cuts through the countryside.