Defence Minister David Johnston has been dumped in favour of veteran MP Kevin Andrews, while NSW MP Sussan Ley to be the second woman in his cabinet as she takes charge of Health and Sport, while Peter Dutton moves from that portfolio and takes over as Immigration Minister.

And Mr Morrison has immediately vowed to get more Australians off welfare and into work next year, describing it as one of his "core goals".

The Prime Minister's first reshuffle contained several surprises and over a dozen moves in a departure from Mr Abbott's previous preference for only minimal tinkering with his ministry.

It was, Mr Abbott said, a chance to "refresh and reset the government" after a bruising first full year in office. The new ministers will be sworn in on Tuesday.

The promotion of Mr Morrison, who is viewed in government ranks as a star performer, underscores the increased domestic focus the government will have next year.

The former Immigration minister will, Mr Abbott said, take responsibility for crafting "an holistic families package which will be such an important part of our political and economic agenda in the first half of next year".

"The ministry for social services is essentially a ministry for economic participation and it is very important to have a minister of Scott's drive and competence in this role," he said.

The expanded portfolio includes welfare, family support, seniors, aged care, the National Disability Insurance Scheme and importantly, childcare and Mr Abbott's signature paid parental leave scheme, which has still not been implemented and faces stiff opposition from Labor and the cross bench.

The changes, Mr Abbott said, would help "put jobs and families at the heart of our political agenda for 2015".

The Prime Minister dismissed suggestions Mr Morrison's appointment was an admission that his economic team of Treasurer Joe Hockey and Finance Minister Mathias Cormann lacked grunt.

The change comes, however, after a vicious backlash against the Coalition's first budget and a difficult year for Mr Hockey in particular.

Mr Morrison said after implementing the government's Operation Sovereign Borders - a hardline policy response that has drawn widespread criticism but which has largely stopped the flow of asylum seeker boats - he would "now turn my attention to our welfare system".

He pledged to "ensure the integrity, dignity and sustainability of our safety net. But the best social service we can afford any Australian, to help them deal with the cost of living, is a job. Getting as many Australians, who are able, to get off welfare and into work will be one of my core goals".

Mr Morrison will also join the government's key expenditure review committee, or razor gang, as the government crafts its second budget, as will newly appointed Assistant Treasurer Josh Frydenberg who fills the spot vacated by Arthur Sinodinos on Friday after the Herald revealed on Thursday Mr Abbott would spend the weekend considering the embattled Senator's fate.

In other changes, Education Minister Christopher Pyne has added Training to his portfolio, Industry Minister Ian Macfarlane will have Science added to his portfolio title, after much public criticism that it had been dropped.

Treasurer Joe Hockey hinted strongly in an interview with Fairfax Media that a package that includes greater support for families with kids in childcare and a revised paid parental leave scheme would form the centrepiece of his second budget.

South Australian senator Simon Birmingham will take over the Assistant Education portfolio which has been vacated by Ms Ley.

Senator Johnston's exit has been widely expected and comes after a series of gaffes and missteps, including the assertion that he wouldn't trust the Australian Submarine Corporation to build a canoe, after losing a chief of staff and then two more senior advisers and after sustained pressure from the opposition.

In a statement, Senator Johnston thanked the men and women of the defence force and promised to make an ongoing contribution to the Abbott government.

Mr Andrews is a political veteran who served as a minister in the Howard government and most recently as Social Services Minister. He takes on a portfolio that has become something of a ministerial graveyard.

Three new parliamentary secretaries were also appointed, with WA MP Christian Porter to serve under Mr Abbott; Victorian Kelly O'Dwyer as parliamentary secretary to Mr Hockey; and Queenslander Karen Andrews to be parliamentary secretary to Mr Macfarlane.

Queensland senator Brett Mason was axed as parliamentary secretary to Foreign Minister Julie Bishop, a job Queensland MP Steve Ciobo will take on while also serving as Parliamentary Secretary to Trade Minister Andrew Robb.

NSW MP Bob Baldwin takes on the job of Parliamentary Secretary Environment Minister Greg Hunt.

Acting Labor leader Penny Wong said while the Prime Minister had revamped his team, there was no change to the government's policies.

"No reshuffle can fix this Government's unfair Budget. No reshuffle can change this PM's agenda to push up cost of living for families, to make life harder for ordinary Australians," she said.

"What we have seen is three front benchers gone from the Senate at a time when the Senate has never been more important. It is not much of a vote of confidence in Mr Abbott's Senate team."

It marks an end to a difficult political year - and the removal of another "barnacle" - for the prime minister, who has seen his standing in opinion polls plummet following a searing backlash against the government's first budget.

smh.com.au