Mr Prescott was the main casualty of the wide-ranging reshuffle of junior and middle-ranking ministers completed by Mr Blair last night. Four of his eight ministers were moved from the Department of Environment, Transport and the Regions, (DETR) including two close allies who he wanted to keep - Dick Caborn and Alan Meale.
One Cabinet source said Gordon Brown, the Chancellor, who saw some of his acolytes moved in last year's reshuffle, warned Mr Prescott recently: "They went for my people last year. This time they will go for yours."
The Deputy Prime Minister fought off a last-minute attempt by Mr Blair to dismantle his whole unwieldy department in the reshuffle, it emerged last night.
But Mr Prescott's supporters confirmed that plans for a new countryside ministry, merging parts of the DETR and the Ministry for Agriculture, Fisheries and Food, were expected in a White Paper around the turn of the year. It is understood the possible Whitehall shake-up was one reason Mr Blair delayed big Cabinet changes this week.
Hiving off part of the DETR would lighten Mr Prescott's huge workload, enabling him to devote more time to tackling Britain's transport problems.
Labour will announce shortly that Mr Prescott is to stand down from his formal party campaign job, which will go to his ally Ian McCartney, who was appointed a Cabinet Office minister yesterday. Mr McCartney's pivotal role will include acting as a link man between the party and government and reviving the morale of grassroots Labour activists.
Mr Prescott is said to feel bruised by the attacks on his running of his department by Blairites in the run-up to the reshuffle. Yesterday he sought a truce during a private meeting with Mr Blair, urging him to rein in the aides he has dubbed the "faceless wonders" who have criticised him. "John wants everyone to pull together now," one friend said last night.
Mr Prescott was said to be "saddened" at the sacking of Mr Meale, the junior environment minister, who had nothing to do with the transport debacle. He had responsibility for canals, which are booming.
"He doesn't feel as though he has been shafted. He has probably reinforced his position as the numero uno in charge of transport," said one close friend.
But allies of Mr Prescott confirmed that a rural affairs ministry was on the cards. "People have been talking about a big department for the countryside and there is something to be said for it," said one. "It might not happen yet but it will be raised within the next year."
Downing Street sought to fight back last night against hostile media coverage of Mr Blair's surprise decision not to sack any of his Cabinet.
Its efforts were helped by huge changes amongst the ministers outside the Cabinet, aimed at beefing up the Government's performance. Fourteen ministers resigned or were sacked, and 13 backbenchers, including five women, were promoted to ministerial office. Fourteen ministers moved sideways and 11 were promoted within the government.
Downing Street insisted that Mr Blair had never planned big Cabinet changes this month. It suggested, however, that Mo Mowlam may have moved from the Northern Ireland Office if talks on power-sharing executive in Ulster had not collapsed two weeks ago. "Had the situation in Northern Ireland developed differently, all sorts of things may have happened," said Mr Blair's spokesman.
Margaret Beckett, the Commons leader, said: "Mo Mowlam I think is in a very special position because the circumstances in Northern Ireland changed and maybe her own feelings changed and that is a special and unusual set of circumstances."
It is understood that Ms Mowlam was furious that she risked being branded a "failure" by Downing Street and the media when the peace process stalled. She then defied Mr Blair by publicly declaring she wanted to keep her post.
William Hague, the Tory leader, accused Mr Blair of "weak leadership" and ridiculed his "non-reshuffle". He likened the Prime Minister to a general who had sacked his infantry instead of his officers when things were not going well."It's wrong to say it's the fault of junior ministers, it's not, it's the fault of the senior ministers," he said.
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