Mr Robinson left the government over a £373,000 loan he gave the former Trade Secretary Peter Mandelson.

Geoffrey Robinson resigned over Mandelson loan

Mr Mandelson also resigned from the government because of the loan - both men insisted they had done nothing wrong.

Ms Primarolo's appointment comes as the political fall-out over the loan row continues with the chancellor's press secretary, Charlie Whelan, agreeing to resign after saying speculation that he leaked the loan story to The Guardian newspaper made his position untenable.

The new paymaster general moves up from her position as Financial Secretary, while Trade and Industry minister Barbara Roche moves from Mr Mandelson's old department to join the Treasury team.

But it is not yet clear if Ms Primarolo will receive a separate salary for her new job.

Mr Robinson had taken on the post on a voluntary basis and lack of funds for ministerial work was suggested as one reason for the delay in appointing his successor.

Old Labour made new

Ms Primarolo, MP for Bristol South, became a member of the left-wing campaign group shortly after entering the Commons.

During Labour's years in opposition she supported many causes dear to the party's left including nuclear disarmament and the withdrawal of British troops from Northern Ireland.

But after Tony Blair became Labour leader Ms Primarolo took up the new Labour line. She moved to Gordon Brown's shadow Treasury team in 1994 and was a surprise choice as a minister after Labour's return to power in 1997.

Mini reshuffle

Other moves caused by December's dual resignation include the appointment of Stephen Timms as a junior minister in the Department of Social Security.

He replaces John Denham, who was switched to the Department of Health when Alan Milburn became chief secretary to the Treasury in the wake of Mr Mandelson's resignation.

Stephen Byers, the previous chief secretary, took Mr Mandelson's job as Secretary of State for Trade and Industry.