Blunkett to return to Cabinet

Tony Blair will try to stamp his authority on his Government at the start of his third term by promoting New Labour allies in an cabinet reshuffle today.

He suffered a setback last night, however, when Alan Milburn, Labour's election co-ordinator, announced that he did not want to remain in the Cabinet. His aides said his decision had been taken some time ago and had nothing to do with the campaign.

Mr Milburn, who returned to the Cabinet last September after earlier quitting as Health Secretary, said he wanted to give more time to his family, the reason also given for his earlier withdrawal.

David Blunkett, who resigned as Home Secretary last December amid turmoil in his private life, is earmarked for a comeback as the Cabinet's "enforcer", with a brief to drive through the public service reforms outlined in the manifesto.

Others tipped for promotion include three Blairites: David Miliband, a Cabinet Office minister, who may become Chief Secretary to the Treasury; Hazel Blears, a Home Office minister, and John Hutton, a Health minister. Those leaving are expected to include Geoff Hoon, the Defence Secretary.

Mr Blunkett is expected to be based in the Cabinet Office and may take the title of Chancellor of the Duchy of Lancaster now held by Mr Milburn. He will chair some important cabinet committees and may take over responsibility for local government, including a review of the council tax, from John Prescott's Office of the Deputy Prime Minister, regarded as "dysfunctional" by Whitehall officials.

The Prime Minister wants to avoid an early conflict with Gordon Brown after the two men reforged a strong partnership during the election. So he may also promote Brownites including Douglas Alexander, a Foreign Office minister, and Yvette Cooper, from Mr Prescott's department.