Spain's prime minister in a major reshuffle of cabinet

The changes come at a time when the country is grappling with a 20 per cent unemployment rate and attempting to emerge from nearly two years of recession.

Mr Zapatero said the new government would be tasked with "completing the economic and social reforms ... so as to accelerate a recovery of the economy and employment."

This is the biggest government reshuffle since Mr Zapatero became prime minister in 2004, and it follows parliament's decision to debate the Socialist draft budget for 2011, which cuts spending by nearly 8 per cent to ?122 billion euros.

The government has secured passage of the budget following deals with two regional parties. Failure to pass the budget could have forced Mr Zapatero to call an early election.

The prime minister named five new ministers in all, saying, it would be "a renovated and politically strengthened government."

While announcing the changes, Mr Zapatero said Interior Minister Alfredo Perez Rubalcaba would replace Deputy Prime Minister Maria Teresa Fernandez de la Vega, while keeping his old portfolio. Mr Rubalcaba has led the fight against the armed Basque separatist group ETA in Spain since 2006. Trinidad Jimenez, who until now was the health minister, will take over from Miguel Angel Moratinos as foreign minister.

Mr Zapatero has ruled out calling an early election ahead of those scheduled for 2012 but has not made known whether he himself will run again.

The prime minister also said Valeriano Gomez will replace Celestino Corbacho as Labor Minister. The move comes just months after the government introduced major labor market reforms and austerity measures that triggered a general strike on 29 September.

Mr Zapatero said the ministries for housing and equality would be folded into the health and development ministries, respectively, reducing the total number of ministries from 17 to 15.