Andrew Grice: An act of brutality from a prime minister on the run

Blair has circled his wagons about him and challenged Brown to order his soldiers to attack

It was Tony Blair's last throw of the dice. "He looked like a man who knew he was doing his last reshuffle," said one cabinet minister who went eyeball to eyeball with the Prime Minister when he unexpectedly found himself shuffled out of his post yesterday.

The shake-up was much more wide-ranging than expected. Mr Blair showed a ruthless streak that he has not displayed in his previous reshuffles, some of which were badly botched. A reluctant butcher, it has taken Mr Blair a long time to, in Margaret Thatcher's words, "learn how to carve the joint". Yesterday's changes were intended as a show of strength and defiance, to signal that he intends to go "on and on" - probably until 2008.

Mr Blair's apparent show of strength was designed to mask his weakness by shifting the media spotlight away from poor - if not disastrous - council results. Initially, the sheer drama of the occasion seemed to have achieved this. But as the dust settled last night, the reshuffle raised as many questions as it answered. Why, for example, did Mr Blair not recast his government a year ago after the general election, a much more logical moment? Surely that was the time to evict Jack Straw from the Foreign Office, as ultra-Blairites have wanted to do since Mr Straw gravitated towards Gordon Brown and bounced the Prime Minister into pledging a referendum on the proposed European Union constitution that - if it not been aborted after the French and Dutch "no" votes - could have brought him down.

Mr Straw and No 10 put a brave face on his demotion. It seems to be the fate of foreign secretaries who fall out with prime ministers to become leaders of the Commons. It happened to Geoffrey Howe and Robin Cook, both of whom later resigned spectacularly from the Cabinet. Others who have cuddled up too closely to Mr Brown for Downing Street's liking, such as Geoff Hoon, have also paid the price.

Tony Blair has circled the wagons around him and, in effect, challenged Gordon Brown to order his foot soldiers to attack him and spill much blood. Significantly, the Prime Minister installed Blairites such as Hazel Blears and Jacqui Smith into the key posts of party chairman and Chief Whip respectively. They will be important in ensuring the "stable and orderly transition" that Mr Blair promised a year ago. But, crucially, not until Mr Blair is ready: frustrated Brownites see no sign of stability, order or transition.

Among Brown supporters, there was dismay not at the promotion of ultra-Blarities such as John Reid but at the wider signals - notably the appointment of Ms Blears. The Chancellor wants a debate on learning the lessons from the council elections, on how Labour can renew itself, and believes that must inevitably, at some point, include a discussion about Mr Blair's exit strategy. The Prime Minister has no intention of discussing his departure with anyone, having had his fingers badly burnt when he mused on the subject during his recent trip to Australia. The tension between the Blair and Brown camps is very high this weekend.

The other big factor in Mr Blair's mind was how to restore the reputation for competence his Government has enjoyed for most of its nine years. The Prime Minister is worried that the "incompetence" tag stemming from the foreign prisoners fiasco will stick. The reshuffle is an attempt to throw off the label.

It is too soon to judge whether the shake-up will give Mr Blair the breathing space he hopes to win to complete his agenda and quit when he is ready. But it may come to be seen as a sticking-plaster reshuffle that doesn't hide the Labour wounds exposed by the council elections for very long.

The Prime Minister has been playing down parallels with 1990, when the Labour opposition won 40 per cent of the vote in the council elections, just as the Tories did on Thursday. The 1990 results were terrible for the Tories but Margaret Thatcher trumpeted their victories in Wandsworth and Westminster, distracting attention from the underlying loss of support. Yesterday's headline-grabbing reshuffle was Mr Blair's "Wandsworth and Westminster," his Labour critics believe. They hope their parallel is right: six months later, Mrs Thatcher was forced out by her own party.