Ken Clarke has denied that being moved from Justice Secretary to minister without portfolio was a humiliation.
The 72-year-old Tory "big beast" told reporters: "Being offered a job in the Cabinet at my age? Don't be so daft. It's rather a privilege, I think."
His move was one of the key changes made by David Cameron to his new-look Cabinet in a reshuffle designed to rejuvenate the coalition Government. The veteran former chancellor is being given a roving "wise head" role with Cabinet status.
Also losing their present roles are Conservative co-chairman Baroness Warsi, Welsh Secretary Cheryl Gillan and Environment Secretary Caroline Spelman. The first two indicated their departures via Twitter while sources confirmed that Ms Spelman was set to leave the top table altogether.
Three female departures will mean Mr Cameron must recruit others from the ranks if he is to maintain his long-held desire to boost the number of women in government.
There is also a return to the front benches for former Liberal Democrat Treasury minister David Laws. The MP, who was forced to resign over his parliamentary expenses just weeks after taking office, is in line to replace Sarah Teather as education minister, according to sources.
Jeremy Hunt has been moved from Culture Secretary to be the new Health Secretary with Andrew Lansley leaving that post to become Leader of the House of Commons, Downing Street said.
Work and pensions minister Chris Grayling is replacing Mr Clarke as Secretary of State for Justice, Downing Street said.
The first confirmed appointment of the reshuffle was Andrew Mitchell as the new chief whip - a move disclosed late last night. Mr Mitchell leaves his post as Secretary of State for International Development to replace Patrick McLoughlin, who is expected to be given a new job, in the key enforcer role for a Tory party that has become increasingly rebellious.
Transport minister Theresa Villiers is replacing Owen Paterson as Northern Ireland Secretary.