Although he ducked sacking any Cabinet ministers, Mr Blair showed a ruthless streak by dismantling the team Mr Prescott had built up at his giant Department of Environment, Transport and the Regions (DETR).
Mr Blair has become increasingly frustrated with the department's performance, particularly on transport. The issue is rising quickly up the political agenda as the public loses patience with the Government over congested roads, privatised railways and the London Underground.
The most surprising change was the sideways move for Helen Liddell, the Transport minister, who switches to the Trade and Industry Department (DTI) only two months after taking on the difficult transport brief. Her relationship with Mr Prescott was strained.
Some insiders saw Ms Liddell's move as a demotion, since she attended Cabinet meetings in her transport role, without having a vote, but will not do so in her new post.
The new Transport minister is Lord (Gus) Macdonald of Tradeston, a former Glasgow shipyard worker who became a television boss in Scotland. He was made a peer last year when he became the Industry minister in a Scottish Office team now being pared down following the setting up of the Scottish Parliament.
Downing Street stressed that Mr Blair and Mr Prescott had agreed that Lord Macdonald was a "real achiever" who would bring huge drive and experience to the transport brief. To head off suggestions about a Scot being in charge of London's ailing transport network, he will be based in the Capital.
Downing Street has become increasingly impatient with the giant department, and regards its creation by Mr Blair on winning power in 1997 as a mistake. "It's an administrative nightmare," one Blair aide said.
Some Blairites wanted to break up the department, possibly by making transport a separate ministry with its own Cabinet minister. But Mr Prescott, who jealously guards his transport brief, fought a rearguard action against such a move. But the price he paid to avoid the humiliation of his department being cut down to size was to lose some of his closest allies.
Blairites have been gunning for what they regard as a clique of Prescott supporters at the DETR. Its leftist slant saw it jokingly dubbed "Moscow University" by Labour modernisers.
Mr Prescott was resigned last night to losing some of his key acolytes, including Alan Meale, a junior minister who was formerly his parliamentary aide, and Dick Caborn, his closest lieutenant. Mr Meale faced the sack while Mr Caborn was tipped for a sideways shift to another department.
Another of Mr Prescott's ministers, Glenda Jackson, resigned to enter the race to become Labour's candidate for mayor of London.
Last night's changes will be seen as a slapdown for the Deputy Prime Minister. It mirrors the reshuffle a year ago in which close allies of Gordon Brown, the Chancellor, were moved from key posts after he revealed his continuing bitterness at not winning the Labour leadership in 1994, when Mr Blair succeeded the late John Smith.
Among the changes to be confirmed today will be the appointment of Lord Williams of Mostyn, a QC and Home Office minister, as the new Attorney General. He replaces John Morris, a veteran former Cabinet minister, who is 67.
Lord Simon, the former BP chairman who became the DTI minister responsible for the European single market, left the Government at his own request so that he can actively campaign for membership of the single currency. Lord Simon, whose job went to Ms Liddell, will continue to advise the Government from outside.
Mr Prescott hit back at his critics yesterday. He told Radio 4 yesterday: "I feel like the fox. It's open season on me at the moment." Last night he declared: "I'm superman," as he denied that his "super-ministry" was too big for one man.