Mo Mowlam has discovered the Third Way in resignations. She resigns, provokes pages of political obituaries, and she is still in her job. Mowlam's Third Way will climax at this month's Labour Party conference, where she will be rapturously, tearfully received as she bids her farewell. The next day, she will be back at work in the Cabinet Office.

Welcome to another new Labour drama where nothing is quite what it seems. Mowlam has gone, but she has not gone. Her demise is supposed to symbolise the decline of the individual in politics, subsumed by the media-obsessed loyalist. Yet Mowlam is, herself, a media-obsessed loyalist. She is a true believer in new Labour - and has been from the beginning, when she formed part of Tony Blair's campaign team.

If Clare Short had been sacked for saying that she was willing to pay higher taxes, or John Prescott had been removed for railing against focus groups and the cautious approach to transport of some Blairite advisers, there would rightly have been an outcry. Even in the tight space that politicians occupy, we would have shrieked, the Blairites are exceptional in allowing no room for any self-expression.

The space is especially tight, partly because we in the media cry "Split!" whenever a politician succumbs to our calls for greater candour. But in the case of Mowlam, she was on message. What is more, when she was on good form, she could sell the message better than anyone else. While other ministers earnestly learnt their lines before being interrogated by John Humphrys, she sounded like a real person: "Morning, John . . . You can ask me that if you like, John, but you know you will be wasting your time . . . and that report you just played, John, had an agenda of its own . . . You were spinning a bit yourself, weren't you, John . . . Thanks a lot, John." What a refreshing change from: "We are for the many, not the few . . . Thank you and good night."

Mowlam's style was part of her appeal, which brings us to the next myth. The Blairite inner court did not resent or envy her popularity. Nor was Blair jealous of Mowlam's standing ovation in the middle of his own speech to the Labour conference a couple of years ago. Blair often behaves as if he had a majority of one. He worries about Middle England. He worries about the Daily Mail. He does not worry about his Cabinet colleagues wanting his job, or about their being popular: quite the opposite. In order to woo Middle England, and just about everyone else in his bulging tent, he and his entourage seek more Cabinet ministers with a popular touch. They complain, sometimes, that Blair is left to do too much of the presentation on his own.

Before the tensions between Mowlam and the Blairite inner court began to intensify 18 months ago, she was seen as a prized asset. Whenever the party had to air a political broadcast, the message went out - send for Mo.

So what went wrong? In her public attempts to stay on in Northern Ireland, she overestimated her political capital. That was the only wider significance of the standing ovation in the middle of Blair's 1998 speech. She made a calculation that her huge popularity made her virtually unmovable. Her declarations that she wanted to keep the job infuriated the Blairites. She became understandably wary and upset when some of that fury reached the newspapers.

I do not believe there was a co- ordinated campaign against her from within Downing Street. But the critical gossip from some insiders was so at odds with her public image that it became news.

She was also rightly upset to have been written out of the recent history of Northern Ireland. History will see her as a central figure, re-energising the peace process in 1997, winning over the fading trust of the Nationalists. A close ally of David Trimble tells me that he and others underestimated her importance in bringing the Nationalists back into the process. If the more intelligent Unionist sympathisers are starting to revise their view of recent history, she can rest assured that others will. By the end, however, Mowlam had become part of the problem in Northern Ireland, as most Northern Ireland secretaries do. Blair moved her not because she was too popular, but because Unionists could not work with her.

Predictably, the move to the Cabinet Office has been a flop. Again, she irritated Downing Street by stating publicly in the early days that she was not enjoying herself. The Cabinet Office has ruined several political careers - David Clark, Jack Cunningham and now Mowlam. Under the Tories, their rising star, David Hunt, never shone again when he proudly strode into the ill-defined job.

Ministers who have worked there say that civil servants do not know how to deal with them. Are they speaking on behalf of the prime minister, or representing other departments? The answer is that they are an extension of the prime minister's office, but, in theory, form a separate department, although one without a budget. So much for joined-up government.

Mowlam may prove an awkward colleague at times, but her departure serves as a warning to the Blairite inner circle. She is by no means the only minister who feels hard done by. Still insecure after 18 years in opposition, Labour tends to favour ministers who are boringly, reliably, tediously sensible.

This is not an issue about Blair and women. Several women will be promoted to the Cabinet after the election, with Patricia Hewitt at the front of the queue. Margaret Beckett and Clare Short - yes, Clare Short - are highly regarded in Downing Street.

The Tories' uncosted pre-election manifesto, launched the day after Mowlam's announcement, begs thousands of questions about the detail. The Scottish Secretary, John Reid, another big talent in a non-job, was chosen to raise the questions and distribute calculators to journalists en route to the Tories' press conference (that is how busy he is at the Scottish Office). Still an asset, Mowlam should be used extensively in the media in the coming months to expose the Tories' curiously fragile arithmetic.

Do not forget: although she has resigned, she is still in her job.