Herat province has long been a stronghold for Khan
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An influential Afghan governor replaced by the country's President, Hamid Karzai, has declined his new job.
Ismail Khan, governor of the western province of Herat, had been given a job as minister of mines and industries.
The move is being seen as an attempt by Mr Karzai to strengthen his position ahead of the elections in October.
Governor Khan has long been seen as resisting efforts by Mr Karzai's government to assert its authority in the region.
A statement from President Karzai's office also said he was replacing the governor of Ghor province which borders Herat.
The Afghan ambassador to the Ukraine, Mohammed Khair Khuwa, will take Ismail Khan's place.
'Personal fiefdom'
The BBC's Andrew North in Kabul says Herat province has been Mr Khan's stronghold for decades.
One of the best known former mujahideen leaders, he led an uprising there against Soviet troops in 1979.
Since taking over as governor in 2001, he has turned it into a kind of personal fiefdom, our correspondent says.
He has received praise in some quarters for reconstructing roads, schools and businesses, but also criticism for stalling on disarming his own militia forces and holding on to tax revenues he earns from border trade with Iran.
Karzai's government is still struggling to control the entire country
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But for the past few weeks, rumours had been growing that President Karzai was preparing to replace Ismail Khan, ever since his forces clashed with the troops of another local militia commander, Amanullah.
Although Amanullah is now under some kind of house arrest, Ismail Khan is widely seen to have been weakened by the fighting in which he lost control of several areas of the province, our correspondent says.
The American ambassador to Afghanistan welcomed President Karzai's decision, but in a statement he also warned anyone involved against taking what he called action which would threaten security in the region.
Earlier, President Karzai gave a speech to set out his manifesto for the forthcoming elections four days after what has so far been a low key campaign got under way.