Andrew Davies takes over the development role

The reshuffle brings to an end the impasse in the ruling coalition created by the temporary resignation of the deputy first minister, Liberal Democrat group leader Mike German.

Mr Davies dismissed any idea that he was merely holding the post until Mr German was free to return to it.

"!'m not keeping the seat warm for anybody. I intend to deliver on this," he said.

But opposition parties have condemned the changes as another short-term fix.

Talk of a cabinet reshuffle had been circulating in the Cardiff Bay political circle for many weeks.

The first minister had been under pressure from within his own party, as well as the opposition, to appoint a permanent replacement for Mr German in the economic development role.

It is a job that Mr Morgan had been doing himself since the resignation of the Liberal Democrat group leader from the cabinet.

Mike German has denied any wrongdoing

Mr German stepped down as Economic Development Minister and Deputy First Minister in July 2001 because of a police investigation connected to his former job at the Welsh exams board WJEC.

Plaid Cymru and the Conservatives have claimed that Mr Morgan was unable to carry out both of his jobs satisfactorily.

The opposition parties cited a string of factory closures and large-scale redundancies over the last nine months as evidence.

On Monday the Liberal Democrats insisted the police inquiry involving Mr German would be concluded "within weeks rather than months".

Liberal Democrat Chief Executive Chris Lines said that as a party they wanted to maintain the partnership with Labour and when it comes to the cabinet they "expect to be treated fairly".

Initial reaction from the opposition parties to the reshuffle was dismissive.

Carwyn Jones had been tipped for the post

Cynog Dafis, Plaid Cymru's director of policy, said the failure to appoint a new economic development minister until now had been "irresponsible".

"It's appalling that Wales has been without a full time economic development minister all this time," he said.

"A great deal of damage has been done."

Conservative group leader Nick Bourne said it was a "short-term fix", claiming that a candidate of a higher calibre than Mr Davies should have been appointed.

"The reshuffle seems to have been determined by the needs of Mike German rather than the needs of Wales," he said.

"I don't think its a change that will be welcomed all around Wales."

Among some Labour backbenchers in the assembly there was dissent too, with Blaenau Gwent AM Peter Law speaking out against the merging of portfolios.

Dennis Balsom, honorary fellow in Welsh Governance at Cardiff University, said Mr Morgan had to keep a empty seat at the cabinet table for the Liberal Democrat leader.

"While the German affair remains unresolved, there has to be a vacancy there for him to go back to," he said.

But he suggested that with the next assembly elections due in May 2003, the Labour-Lib Dem coalition may not last beyond the autumn.