WENDY Alexander has been recalled to Labour's campaign frontline by Jack McConnell, five years after he saw her off as the main leadership challenger.

The formerEnterprise Minister is to take on the most powerful role on the Scottish Parliament's back benches, as convener of the Finance Committee.

And while that will require her to chair cross-party meetings, the First Minister has also asked her to lead the counter-attack against the SNP's successful push for business community support.

The brief is to persuade business leaders to go public with support for Scotland staying in the UK, after the First Minister revealed this week his concerns that they are failing to highlight publicly their concerns about possible instability that could come with independence.

The move is significant for aiming to heal Scottish Labour rifts. Ms Alexander had strong backing from London to take over the leadership when Henry McLeish resigned five years ago but her challenge to Mr McConnell crumbled before it properly began. She resigned as a minister six months later, and distanced herself from the First Minister.

Promotion to leadership of the Finance Committee, which has caused most discomfort to ministers by challenging their financial claims on several fronts, is recognition of Ms Alexander's talents and energy. It helps counter the impression that MrMcConnell has sidelined all but the most loyal colleagues.

Holyrood convention means a Labour MSP was bound to replace Des McNulty as convener, after his ministerial appointment this week.

A source close to Mr McConnell said his former rival was the obvious choice for the finance job: "No doubt there will be times when she will make life uncomfortable for the executive, but that is one of the things that you would expect from a good committee chair."

The First Minister's request to take a leading role in countering the SNP threat represents a reaching out to Gordon Brown's close allies in Scotland, when the party faces a tough contest at next year's election.

Relations between the McConnell team and the Labour leadership in London have been strained, with reports of tussling over control of the party's campaign. Ms Alexander is not only an ally of the Chancellor, but also has a family link to the Scotland Office, where her brother Douglas is Secretary of State.

According to the Labour leader's aide: "The First Minister has discussed the role that Wendy can play in Labour's election campaign in the months ahead. She was keen to become more involved and the First Minister was keen that she did."

The developments also reflect growing concern within Labour that the SNP is making headway with its argument that independence would be good for business.

Jim Mather, the SNP enterprise spokesman, has been courting the business community and establishing the case for sharp business tax cuts similar to Ireland's.

Its credibility has been boosted by significant donations from entrepreneurs, including GBP100,000 from Kwik Fit founder Sir Tom Farmer.

Mr Mather said he would meet the challenge with "alacrity and real enthusiasm". He added: "There has been a lot of talk about debate, but no debate. If they are arming up with Wendy, I look forward to taking the argument on."

Ms Alexander, 43, is a former business consultant who was special adviser to Donald Dewar when the Scotland Act was being drawn up. As a minister, she sparked the ferocious row over repeal of the law on homosexuality in the school curriculum, and later set the current policy course for economic growth.

She privately complained that she was over-burdened with ministerial work by Mr McConnell, and was isolated in cabinet. Having moved to the back benches as Paisley North MSP, she became a visiting professor at Strathclyde University and organised a series of major economics lectures.