Lord Mandelson is to be installed in the ceremonial role of High Steward of Kingston Upon Hull.
The former Business Secretary and European Commissioner will follow in the footsteps of his grandfather - Labour foreign and home secretary Herbert Morrison - who held the position from 1956 to 1965.
The post has been resurrected along with another ceremonial role in the east coast port - the Sheriff of Hull, which will be filled by the former Tory minister Virginia Bottomley.
When the council announced Lord Mandelson's selection for the High Steward role, Lord Prescott, who was MP for Hull East from 1970 to 2010, said he was surprised it had not been discussed with him. But he said: ''I also have no interest in being a steward again - I did that job on the liners for 10 years.''
The Queen agreed to resurrect the posts, which lapsed with the creation of the now defunct Humberside County Council in the 1970s.
Hull City Council commissioned local company Oresome Gallery and Jewellery Workshop to design and create the chain of office for the High Steward and refurbish the chain of office for the Sheriff of the city.
Funding for the chains came from money left to the council by Colonel Rupert Alexander Smith, who played a significant role in the city, with roles including Sheriff of Hull between 1949 and 1950, Lord Mayor of Hull in 1970/71, as well as being Lord Lieutenant of Humberside between 1980 and 1983.
Council leader Councillor Stephen Brady said: "We have many talented and creative people in the city and Oresome Gallery has done a great job creating and restoring the chains of office. The council endeavours to support the growing creative sector in Hull, which is vital for the city's continued regeneration."
The office of High Steward was originally created in 1583, with the office holder expected to act as a highly placed lobbyist for the interests of Hull within central government in return for the honour of the title. The person appointed to the post should be a Lord and a Privy Councillor.
The first High Steward was Sir Francis Walsingham, Secretary of State to Queen Elizabeth I.