A former finance minister, Jean-Louis Borloo, has been named as the new number two in the French government following Sunday's general election.
Jean-Louis Borloo was promoted to the number two position
He is now minister of state and heads a new environmental super-ministry, replacing Alain Juppe.
Mr Borloo will be replaced as economy minister by Christine Lagarde, who was previously named agriculture minister.
President Nicolas Sarkozy reshuffled his team after his right-wing UMP party fared worse than expected at the polls.
Mr Juppe, a prominent figure on the right, resigned after losing the election in his western Bordeaux constituency.
The new agriculture minister, replacing Ms Lagarde, will be former foreign minister and European commissioner Michel Barnier, a presidential spokesman said.
Ms Lagarde becomes France's first female finance minister
Ms Lagarde, in charge of the economy and finance, will oversee some of Mr Sarkozy's promised reforms, including tax cuts and measures to liberalise the labour market.
Francois Fillon, a key ally of President Sarkozy, remains as prime minister. A moderate conservative senator, he helped direct Mr Sarkozy's successful presidential election campaign.
Mr Borloo is now effectively his deputy, running a ministry that covers energy, the environment and transport.
He was criticised for suggesting the government might be preparing to raise value added tax. Many in the UMP blamed him for the party's lower than expected majority after Sunday's election.
The new government has an additional 11 secretaries of state, to be increased to 12 in October, when French national rugby team coach Bernard Laporte joins as secretary of state for youth and sport.
Mr Sarkozy's UMP party and its allies won 345 seats in the 577-seat National Assembly - far short of the landslide win that many predicted.