Jeremy Hunt has been promoted to Health Secretary in Prime Minister David Cameron's first major cabinet reshuffle since he took office.
Mr Hunt, who came under fire earlier this year over his handling of the News Corporation bid for BSkyB, takes over the role from Andrew Lansley.
Mr Lansley, who faced a tough parliamentary battle over the Government's controversial NHS reforms, becomes the new Leader of the House of Commons, replacing 71-year-old Sir George Young.
Maria Miller, MP for Basingstoke and Minister for the Disabled, replaces Mr Hunt as Culture, Media and Sport Secretary and is also appointed Minister for Women and Equalities.
Veteran Tory Minister Ken Clarke is also among the casualties of the reshuffle and has lost his job as Justice Secretary to Chris Grayling, the former Employment Minister.
According to Sky sources, Iain Duncan Smith, the current Work and Pensions Secretary, had been offered the Justice post but decided to stay in his current role to "get on with the job". Education Secretary Michael Gove has also said he is staying put.
Doubts had been raised about the future of Mr Clarke, 72, whose right-wing critics in the Conservative Party loathe his pro-European views and regard him as soft on law and order.
Though initially reluctant to move the Tory's controversial "big beast" has agreed to stay in the Cabinet as minister without portfolio.
He told Sky News it was time to take a step back and take on a more advisory role.
"I agreed with David when I arrived that I would do it for a couple of years - that was the agreement that we had when he appointed me. That's what we have stuck to and I am pleasantly surprised he's asked me to stay on the Cabinet in a different role," he said.
"At my age you do occasionally have to step down from a heavy departmental role before you suddenly realise you can no longer quite handle it," he added.
Among Lib Dem promotions, Nick Clegg's ally David Laws is expected to return to the Government as Education Minister two years after being forced to resign over his parliamentary expenses.
Theresa Villiers is the new Northern Ireland Secretary and told Sky News that she was "really, really pleased" with her promotion from Transport Minister, as she left Downing Street.
She takes over from Owen Paterson, who replaces Caroline Spelman as the new Environment Secretary.
Welsh Secretary Cheryl Gillan is also leaving the Government and confirmed her departure by removing her title from her Twitter account. She is replaced by Clwyd West MP and Welsh Office Minister, David Jones.
Housing Minister Grant Shapps is new co-chairman of the Conservative Party and will attend Cabinet as a minister without portfolio.
He replaces Baroness Warsi, who is appointed Faith and Communities Minister, as well as a senior foreign office minister, working alongside Foreign Secetary William Hague.
She also took to her Twitter account to break the news, tweeting: "It's been a privilege and an honour to serve my party as co-chairman, signing off @ToryChairman, signing on @sayeedawarsi."
Justine Greening, who had warned that she was ready to quit if the coalition abandoned its oposition to a third runway at Heathrow, loses her Transport brief to become the new International Development Secretary, taking over from Andrew Mitchell.
She is replaced by Patrick McLoughlin, whose shoes are filled by Mr Mitchell - the first change to be confirmed this morning.
Mr Mitchell now faces the tough task of restoring discipline among Tory MPs, which broke down spectacularly in the massive revolt against Nick Clegg's House of Lords reforms.
While the top jobs of Chancellor, Foreign Secretary and Home Secretary will remain unchanged, Mr Cameron is expected to bring in several younger MPs to replace older junior ministers who will be asked to step down.
Home Secretary Theresa May hailed the reshuffle as one "looking to the future".
"It's about building on our reforms, focusing on delivery and bringing forward the next generation," she told Sky News.
"In further announcements and appointments that the Government will be making, you will see our plans to make the economy competitive and to make Britain a country for people who work hard and want to get on.#
She said the decision to replace Mr Lansley wih Mr Hunt at the Department of Health did not mean plans to overhaul the NHS would grind to a halt.
"Jeremy Hunt will inherit those reforms and take those forward. The policies will be the same, the reforms will still be put in place," she said.
She also rejected suggestions of there being a shortage of women around the Cabinet table, saying: "What you will also see, I'm, sure, from other appointments being made is that there will be women coming into other positions, and crucially, across the board, we will see the next generation being brought on."