The business secretary said he and his fellow ministers were 'in the fight of our lives'.
'But conference let me say this: If I can come back... we can come back,' Lord Mandelson, who said the government had to think 'like insurgents, not incumbents', he argued.
His words were backed earlier on Monday by a ComRes poll for the Independent, which said it was still possible for Labour to prevent a Tory victory, albeit at the price of jettisoning Gordon Brown.
But Lord Mandelson gave his unequivocal backing to the prime minister, saying the choice at the next election was between the 'shallowness' of David Cameron and the 'experience and change' offered by Mr Brown.
He added that he was 'proud to serve in Mr Brown's government as he led the 'fightback against the global recession'.
Lord Mandelson, who made a sensational return to government last year, said he knew 'deep down in his guts' that Labour would lose the 1992 election.
'This time, it is not cut and dried,' he said. 'This election is up for grabs. So conference, we may be the underdogs. But if we show the British people that we have not lost the fighting spirit and appetite for change which has defined this party throughout its history then we can and still win.'
Lord Mandelson said there were encouraging signs of the economy picking up, although the recovery remained 'fragile and uncertain', specifically in manufacturing and the car industry, where he announced the extension of the car scrappage scheme to an additional 100,000 cars and vans.
He also accepted mistakes had been made on manufacturing by the Labour government, saying 'we have not got everything right'.
'The truth is growth was so strong we started to take it for granted,' the business secretary said.
'We nurtured finance - not wrongly, but we should have done more to nurture our other strengths as well.'
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