EXCLUSIVE: I've not been sidelined - Ruth Kelly

The Bolton West MP was one of the key figures involved in Tony Blair's reshuffle of his Cabinet yesterday, the biggest since he came to power in 1997.

It followed two weeks of scandal and a disastrous performance nationally in the local elections.

While the Prime Minister sacked beleaguered Charles Clarke as Home Secretary, he allowed John Prescott to remain as Deputy Prime Minister.

But Mr Prescot was stripped of his sprawling department and that will now be run by Ms Kelly.

She has been appointed Secretary of State for Communities and Local Government, the renamed Office of the Deputy Prime Minister.

Ms Kelly takes over Mr Prescott's area of responsibility which includes local planning matters.

She said today: "I see this very much as an upwards move."

In an exclusive interview with the Bolton Evening News, Ms Kelly denied claims made by commentators that she had been sidelined from the Cabinet's inner circle.

She said: "My new role will touch the lives of people in every section of our society. It will affect where we are born, live, grow up and work.

"Obviously I'm disappointed to be leaving my post as Education Secretary because it was a job I enjoyed, but now I have new responsibilities to look forward to."

Ms Kelly said she would be taking on one the biggest jobs in the Government, which will include almost all of the responsibilities of the Office of the Deputy Prime Minister, with 300 senior civil servants working for her.

She said that she did not believe the job had been created to distance her from the controversy surrounding the Education Department which followed the revelation that some sex offenders were being allowed to work in schools.

"The reshuffle was inevitable and was further reaching than many had expected," she said.

"I think I have proved myself as a politician in my last job and I'm confident that people won't interpret my new role as something created to distance me from the Cabinet.

"This is a job which I think has been created for me to take on one of the Government's widest and most important portfolios."

Ms Kelly remains in the Cabinet and will also be Minister for Women. She described her department's agenda as exciting.

She said: "We are the department of place, communities and citizen empowerment.

"My new responsibilities including race, women, faith, community cohesion and equality reinforce this challenging agenda."

Political commentators said Mr Blair had sidelined or demoted nearly a third of his Cabinet in a ruthless reshuffle.

Mr Clarke was offered "a number" of alternative Cabinet posts after being sacked as Home Secretary, but refused to take any of them and returned to the backbenches.

He was replaced as Home Secretary by John Reid from Defence.

The former Home Secretary was one of seven Cabinet members out of 23 to lose out on a day of high drama at Westminster.

Two others lost their seats at No 10's top table - former Commons Leader Geoff Hoon and party chairman Ian McCartney.

They were demoted to Ministers of State who may attend Cabinet, Mr Hoon as Minister for Europe, Mr McCartney, who last year had a heart bypass operation, as a foreign trade minister.

He is replaced as party chairman by former Home Office minister Hazel Blears, the MP for Salford.

As well as retaining his Cabinet post as Deputy Prime Minister, John Prescott also keeps his grace and favour homes at Admiralty House and Dorney Wood, along with his salary.

Mr Blair's spokesman said the two men had discussed the changes to his role 12 months ago, long before revelations of Mr Prescott's affair with his secretary Tracey Temple, and stressed the Deputy Prime Minister would continue to chair key Cabinet committees.

Ms Kelly is succeeded as Education Secretary by ex-Trade Secretary Alan Johnson.

Ex-Foreign Secretary Jack Straw becomes Commons Leader in a move No 10 said he had wanted after long stints at two gruelling departments following his own spell as Home Secretary.

He was replaced by Margaret Beckett, moving from environment to become Britain's first woman Foreign Secretary.

David Milibandtakes over her job at Environment, Food and Rural Affairs.

On-the-ropes ministers Health Secretary Patricia Hewitt and Tessa Jowell in Culture, Media and Sport remained in post.

Chancellor Gordon Brown had earlier warned the Government needed to act to renew itself "within days" and announced he was to have talks with Mr Blair this weekend about the future direction of the party.

Former Cabinet minister Andrew Smith echoed calls from some backbenchers for Mr Blair now to set a date for his departure.

"I think the sooner we see a timetable for the orderly transition which the Prime Minister has promised the better," he told BBC Radio 4's PM programme.