Mr Michael Portillo is believed ready to electrify the Tory leadership race by declaring himself a candidate to succeed Mr William Hague.
The sacking of the Europe minister, Mr Keith Vaz, was the highlight of Mr Blair's shuffle of the middle and lower ranks of his second-term administration. But all Westminster eyes were on the latest manoeuvrings in the Tory succession stakes. Informed sources at Westminster predict an early bid by Mr Portillo to seize the Tory crown, with an announcement expected within the next 24 hours and, possibly, even later today.
The charismatic shadow chancellor kept the guessing game going last night, returning from a brief holiday in Morocco signalling that his decision was made but that he was not yet ready to declare.
His expected announcement will electrify the succession race opened by Mr Hague's resignation in the immediate aftermath of Thursday's general election defeat. It will set the scene for a bitter battle with a section of the Thatcherite right bitterly opposed to Mr Portillo's advocacy of a more inclusive and tolerant Conservative Party.
Since Friday there have been suggestions that Lady Thatcher might endorse Mr Iain Duncan-Smith, the ex-Guards officer and vigorous Eurosceptic. However, some Tory sources say it is possible that the former prime minister will decide not to intervene in the contest, which may not be completed until late July or early August.
Mr Portillo was quickly installed as the bookmakers' favourite following Mr Hague's decision to quit the stage. Once Lady Thatcher's anointed, the irony is that Mr Portillo's ultimate success will almost certainly turn on a deal with proEuropean, centre-left MPs led by Mr Kenneth Clarke.
And in a sign of the bitter battle to come, Mr Portillo came under fire from Tory peer Lord Tebbit. He declared he was never convinced of the shadow chancellor's Thatcherite credentials and said the party had other leadership candidates, including the "remarkably normal" Mr Duncan-Smith.
As Mr Portillo confirmed he would make a statement "at the moment of my choosing", Mr Clarke dismissed suggestions the two had struck a deal.
The pact would reportedly see Mr Clarke stand aside in return for a place in the shadow cabinet, where he would campaign for a Yes vote in a referendum on British membership of the single currency.
But calling for a period of "quiet reflection" yesterday, Mr Clarke insisted: "I have no pact with Michael Portillo or anybody else and I have had no negotiations about any agreements of that kind. In fact, I don't think I shall be making up my mind about what I shall do for a week or two at least."
Mr Portillo and his supporters, meanwhile, will have drawn strength from yesterday's NOP poll for Channel 4 news, which showed he was the favourite among Conservative voters to succeed Mr Hague.
The poll showed 34 per cent of Conservative voters backed Mr Portillo against 20 per cent who supported Mr Clarke. However, when all voters were asked their preference for the next Conservative leader, Mr Clarke led Mr Portillo by 30 per cent to 22 per cent.
Mr Duncan-Smith was also cautioning against "unseemly haste" in the battle to succeed Mr Hague. And in what was seen as a sideswipe at shadow home secretary Ms Ann Widdecombe, who is taking "soundings" among the Tory ranks before a widely expected leadership bid, he urged colleagues to "listen a bit more and lecture a bit less".
Among the Labour MPs promoted and demoted in Mr Blair's ministerial shuffle, the departure of Mr Vaz was the most widely trailed. His job was given to the mildly Eurosceptic former energy minister, Mr Peter Hain.
Another casualty was sports minister Ms Kate Hoey. But there was a return to the ministerial ranks for the former First Minister in the Welsh Assembly, Mr Alun Michael, who becomes rural affairs minister and the former social security secretary, Ms Harriet Harman, who takes over as Solicitor General. Mr Michael resigned from his Assembly position before losing a vote of no confidence tabled by opposition parties over European aid in February 2000.
Soon after she was sacked in 1998, Ms Harman criticised the "macho" style of Mr Blair's government and said it was high time some of the men holding high office "made space" for their female counterparts.
In the Northern Ireland Office, Ms Jane Kennedy replaces Mr Adam Ingram as Security Minister. He moves to the MoD to become armed forces minister.
Northern Ireland minister Mr George Howarth leaves government, and the new parliamentary secretary at the Northern Ireland Office is Mr Des Browne, who will have responsibility for criminal justice, victims and human rights.