Known from next Monday as the Department of the Environment, Transport and the Regions, the move reflects Mr Prescott's desire for civil servants in the two sections to work more closely together.
The first victim of the new set-up is, as predicted by The Independent last week, Sir Patrick Brown, Permanent Secretary at the Department of Transport.
Ministers decided the new "superministry" run by the Deputy Prime Minister required only one top manager. The new position is likely to be filled by Andrew Turnbull, Permanent Secretary at the Department of the Environment.
The Department of Transport came into being in 1976 as a separate ministry. The Conservatives beefed up its remit in the Eighties by adding to it shipping and aviation from Trade and Industry.
Many observers say the transport ministry was always likely to be swallowed up by other departments. With most of its industries - rail, shipping and aviation - now in the private sector, ministers looking for more savings would have found the DoT at the top of their list.
The new super-department began consulting on its plans for Regional Development Agencies yesterday.
These are intended to boost development and competitiveness, attract investment and help small businesses in the English regions when they start operating in 1999.
In a slim consultation paper, the department says it wanted views on whether the agencies should be involved in marketing the region, training people, giving grants and loans to businesses, purchasing derelict land and readying it for development and, controversially, planning and even building transport infrastructure, including roads. Leading article, page 21Reuse content