David Cameron has conducted his first reshuffle, with a shake-up of his top team which appeared designed to quell unrest within his Conservative Party.
But he sparked a row with London Mayor Boris Johnson by moving Justine Greening, a strong opponent of a third runway at Heathrow Airport, away from the transport brief.
Mr Johnson accused the Prime Minister of planning to ditch his promise not to expand Heathrow, but Downing Street insisted that the appointment of Patrick McLoughlin as Transport Secretary did not signal a shift in Government policy.
Other high-profile moves included the appointment of Jeremy Hunt as Health Secretary, replacing the architect of controversial NHS reforms Andrew Lansley, who is demoted to Leader of the Commons.
Mr Hunt's promotion, despite controversy over his handling of the BSkyB takeover bid as Culture Secretary and the Liberal Democrats' refusal to back him in Parliament, was seen as a reward for the successful delivery of the London Olympics.
And the former banker credited with helping bring the Olympics in on budget and on time, Locog chief executive Paul Deighton, was brought into the Government as Treasury minister for infrastructure and economic delivery.
The coalition's first major reshuffle was discussed by Mr Cameron and his Liberal Democrat deputy Nick Clegg, who brought his close ally David Laws back into government two years after his resignation over an expenses scandal.
But many of the Conservative appointments are unlikely to please the junior party.
The Prime Minister promoted hardliner Chris Grayling to Justice Secretary, replacing veteran Ken Clarke, who had the support of many Lib Dems on issues like human rights but was criticised by the Tory right as too soft.
Mr Clarke remains in the Government as minister without portfolio and will sit on key Cabinet committees including economic affairs and the National Security Council. But senior Tory backbencher Peter Lilley warned that giving the former Chancellor this wide-ranging role risked sowing "confusion" over economic policy if he disagrees with George Osborne.