Government reshuffle: Banks and Jackson quit but Cabinet left intact

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TONY BLAIR sprang a surprise last night by shelving changes to his Cabinet until the autumn, following weeks of speculation about a shake- up.

But Mr Blair acted to tackle the growing crisis in Britain's ailing transport system by dismantling John Prescott's team at the Department of Environment, Transport and the Regions. The big shake-up there will be seen as a warning to the Deputy Prime Minister to "get a grip" on transport.

The Tories accused Mr Blair of "flunking" the reshuffle in the face of public opposition to his planned changes by Cabinet ministers Mo Mowlam and Frank Dobson, who both wanted to keep their jobs.

Some ministers admitted privately that the "damp squib" reshuffle had been badly handled. "There is a real feeling that it is a mess," one said.

Although Mr Blair carried out a wide-ranging reshuffle of his junior and middle-ranking ministers, the only change at cabinet level was the promotion of Paul Murphy, a Northern Ireland minister, to the post of Secretary of State at the Welsh Office. He replaces Alun Michael, the First Secretary in the new Welsh Assembly.

Tony Banks is to stand down as Sport minister to become "special envoy" for England's bid to host the 2006 World Cup and Glenda Jackson has resigned from her post as Transport minister for London. She announced last night that she will aim to become Labour's candidate for mayor of London. Mr Blair has reassured Ms Jackson she could emerge as the party's standard- bearer. But his aides still hope to arm-twist a reluctant Mr Dobson to run, despite his wish to remain Secretary of State for Health.

Mr Blair had three reasons for putting off Cabinet changes until later this year. First, Ms Mowlam wanted to stay on as Secretary of State for Northern Ireland for a final attempt at securing a lasting peace settlement. Second, Labour has put off, until after its annual party conference in September, the task of choosing its candidatefor mayor of London.

Third, the Prime Minister wants to bring back Peter Mandelson. Aides have advised Mr Blair that it is too soon to bring Mr Mandelson back only seven months after his spectacular fall, but he could now be in line to take over from Ms Mowlam in Ulster in the autumn.

The appointment to the Welsh Office of Mr Murphy, who was a contender for Ms Mowlam's job, boosts Mr Mandelson's prospects of landing the Northern Ireland job.

More than 12 ministers will leave the Government when Mr Blair completes his changes today. They include Lord Simon, an Industry minister, Lord Donoughue, an Agriculture minister and John Morris, the Attorney-General, who will be replaced by Lord Williams of Mostyn, a Home Office minister. The sackings include Tony Lloyd, the Foreign Office minister criticised over the "arms-to-Sierra Leone" affair, whose job will go to John Battle, the Energy minister.

The Tories said that the saga undermined Mr Blair's image as a strong leader, claiming he was a "imprisoned by his Cabinet". But Downing Street insisted that Mr Blair had never intended major changes this month. It said that he had not had time to consider the reshuffle in the lower ranks until yesterday.