What transpired was routine adjustment to further strengthen the cabinet, this according to Prime Minister Julia Gillard, who also rejected suggestions that she had to deal with specters of dramatic departures prior to the latest revamp.

"What I have done here is to select the best team, the strongest team to deliver the Government's priorities in 2012 which are about jobs, the economy and fairness," Ms Gillard was reported by ABC as saying on Tuesday.

Ms Gillard reconfigured the composition of her top lieutenants Monday that paved the way for the ascension of two new figures - Bill Shorten and Mark Arbib - said to be the main engineers that catapulted the Prime Minister to her current post last year.

Defending her decision to push up Shorten and Arbib, Ms Gillard told ABC Radio that both men were capable to handle their new responsibilities in the cabinet.

"Bill Shorten's been promoted and that's appropriate. Bill's done a remarkable job when he had disability as a responsibility. The reason a national disability insurance scheme is on our nation's agenda is because of Bill Shorten and his work," the Prime Minister said of Shorten's entry to her cabinet.

On Arbib, she added that the new cabinet minister possesses abilities that would prove useful to the government.

"Mark Arbib has capacity, the capacity to step up and do more, and I've asked him to do more," Ms Gillard said.

The reshuffling, she stressed, was not intended to hand out rewards to her supporter nor to weaken the powerbase of former Prime Minister Kevin Rudd, who Ms Gillard notes had retained the Foreign Ministry portfolio.

Her latest move saw Attorney-General Robert McClelland losing his high-profile post though he retained a cabinet rank by jumping into the Emergency and Housing Ministry, with Nicola Roxon shedding her Health portfolio to take over from McClelland.

Ms Gillard admitted that McClelland had expressed his preference to stay on as AG but welcomed the new challenges that await him on his new post.

"I would have preferred to have stayed there ... but having said that, it is an honour to serve the Australian people in cabinet," McClelland was reported by the Australian Associated Press (AAP) as saying.

As the new Attorney-General, Roxon vowed to continue the federal government's campaign against smoking and experts said her hands would be full battling the legal challenges that giant tobacco firms have raised against the cigarette plain packaging legislation that is set to take effect by December next year.

Another 'difficult decision' for her, Ms Gillard said, is the perceived demotion of Senator Kim Carr, who was eased out of the cabinet and moved to the manufacturing and defence materiel ministry - a position bereft of a cabinet office.

When reached for comments, Rudd echoed the general sentiments that Carr did well as the Industry Minister, making his departure from the office a surprising development.

"(Carr) was largely responsible during the global financial crisis for ensuring that none of the Australian car companies fell over," Rudd told ABC.