Education Secretary Michael Gove is to become the new chief whip in the most wide-ranging cabinet reshuffle of David Cameron's premiership.
He has been replaced by Treasury minister Nicky Morgan, as Mr Cameron promotes more women into top jobs.
Ken Clarke is among the old guard to have stood down and Foreign Secretary William Hague has moved to a lower profile role as Commons leader.
Defence Secretary Philip Hammond has taken over at the foreign office.
Among the other changes announced so far:
- Lord Hill, Leader of the House of Lords, has been nominated as the UK's next European Commissioner
- Liz Truss, a 38-year-old education minister, who entered the Commons in 2010, has been drafted into the cabinet as environment secretary
- Business minister Michael Fallon - a veteran frontbencher - is named as the new defence secretary
- Sir Bob Kerslake is to step down as head of the civil service in the autumn and will retire as permanent secretary at the communities department
- Sir Jeremy Heywood, the cabinet secretary, is to take back the role of the head of the civil service - two years after the roles were split
- David Jones is sacked as Welsh secretary to be replaced by his deputy Stephen Crabb
- David Willetts replaced as universities minister by Greg Clark, who will attend cabinet
- Justice Minister Jeremy Wright, a 41-year-old barrister, replaces Dominic Grieve as Attorney General, the government's chief legal officer
- Baroness Tina Stowell, a former head of corporate affairs at the BBC, is the new leader of the House of Lords
- Mark Harper who quit as immigration minister after admitting employing an illegal immigrant as a cleaner, is brought back into government as a work and pensions minister
Announcing Michael Gove's surprise move to chief whip, a behind-the-scenes role in charge of party discipline, Mr Cameron said on his Twitter feed that the former education secretary would also have "an enhanced role in campaigning and doing broadcast media interviews".
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MP Ken Clarke tells the BBC why he thinks all-women shortlists are a good thing
Mr Gove has been one of the most radical and at times controversial figures in David Cameron's government, driving through far-reaching changes to the education system such as free schools and the extension of the academy programme.
'Male, pale and stale'His calls for a return to more traditional teaching methods have brought him into conflict with the unions - his replacement by the relatively unknown Nicky Morgan could be seen as an attempt to calm things down, said the BBC's Norman Smith.
He said the aim of the reshuffle was to bring in fresh faces and make voters think again about the Conservatives' "male, pale and stale" image.
The number of women in cabinet has been doubled from three to six so far, out of a total of 23 ministers in Mr Cameron's top team.
Downing Street is talking up Mr Gove's new role, which will see him leading the fight against Labour in the general election campaign.
"You should expect to see a great deal of Michael Gove on your TV and radio channels," said the prime minister's official spokesman.
But BBC Political Editor Nick Robinson said it will be seen by some as a demotion as Mr Gove will no longer be a full cabinet member, just have the right to attend meetings when required.
"He now continues not as a leading Tory figure in his own right but as 'a friend of David and George'," writes Nick Robinson.
"His first job would appear to be to help them win the election. His second to make sure Boris and his old sparring partner Theresa May aren't the next Tory leader."
The teaching unions have said they are seeking urgent meetings with Nicky Morgan to discuss pay, pensions and professional standards.
Ofsted chief Sir Michael Wilshaw said he was "surprised and shocked" by Mr Gove's departure, telling LBC radio: "I'm a great admirer of the Secretary of State, I think he's been a transformative and radical minister of education."
Analysis
By BBC Political Correspondent Robin Brant
Three things to take from this reshuffle:
1. This is about presentation. Unashamedly the prime minister is changing what his government looks and sounds like to voters. It looks like he's doubling the number of women cabinet ministers, albeit from a low starting point of just three. The new education secretary, Nicky Morgan, is a marathon-running working mum. The new environment secretary, Liz Truss, is still in her thirties. But the risk is that some, both inside and outside politics, will see it as just that; presentation, and nothing more.
2. The Tory take on Europe is a key theme to the reshuffle. Arch-Eurosceptic Owen Patterson is out, as are the more Europhile Ken Clarke and the now ex-Attorney General Dominic Grieve. Some in the Conservative Party believe Mr Hague "went native" in his time at the Foreign Office and his anti-Brussels sentiment waned. We still don't know if Liam Fox is returning to the government, but much is pinned on the ascension of Phillip Hammond to foreign secretary - he has said the UK should leave the EU if it doesn't get the reforms it wants.
3. The prime minister has gone on to full election fighting mode. Michael Gove and Mr Hague both have less significant jobs but Downing Street is making it clear both will have big campaigning roles. The respected statesman from the north and the uber-polite, articulate - although his toxicity became too much at education - son of adopted parents will be prominent media performers between now and May 2015.
Other women to be promoted into ministerial roles, outside of the cabinet, include Anna Soubry, who becomes a defence minister, and whips Clare Perry - who goes to transport - and Priti Patel, who becomes Exchequer Secretary at the Treasury.
Among other changes, it has been reported that former defence secretary Liam Fox could return to the government although this has yet to be confirmed.
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William Hague said he was "delighted" with new role
BBC political editor Nick Robinson said Environment Secretary Owen Paterson has effectively being fired, while former Commons leader Andrew Lansley has also left the government.
But the biggest name in the changes has been Mr Hague, who announced late on Monday that he had decided to step down as an MP at next year's general election after 26 years - including four turbulent years as Tory leader.
Until then he will be, as Mr Cameron put it, his "de facto political deputy" and leader of the House of Commons. Mr Hague said he was "delighted" with his new role as he had always enjoyed speaking in the Commons and explained his retirement at the next election by saying he wanted to return to his successful writing career and to spend more time with his wife.
'Massacre of moderates'Some see the appointment of Mr Hammond - who has said he could vote to leave the EU if the UK did not get the changes it wanted in a future re-negotiation - and the departure of Dominic Grieve as Attorney General as a shift towards a more Eurosceptic stance.
But Ken Clarke - the cabinet's most prominent Europhile - heading for ministerial retirement after a career in frontline politics that stretches back to the early 1970s - dismissed such claims, telling BBC Radio 4's Today programme: "If the whole thing is all about Europe then we really have gone mad."
He also praised Mr Cameron's decision to promote more women into frontline roles, saying it was long overdue.
Labour has described the reshuffle as the "massacre of the moderates", claiming it marks a lurch to the right on Europe and a range of other issues.
The party also poured scorn on claims more women were being promoted, saying "half the new faces in the cabinet we've heard of so far are male".
Labour's Shadow Minister for Women and Equalities Gloria De Piero said: "The Tories have spent the last few days briefing that this would be the reshuffle which fixed David Cameron's 'women problem' but it's turning in to a damp squib."
Among other changes:
- Esther McVey - who was tipped for promotion - will remain as employment minister but with the added status of attending cabinet meetings
- Matt Hancock is given a minor promotion at the business department and will attend cabinet
- A cull of long-serving ministers includes chief whip Sir George Young, minister for civil society Nick Hurd, Foreign Office minister Hugh Robertson, energy minister Greg Barker, international development minister Alan Duncan, Northern Ireland minister and policing minister Damian Green
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