Charles Kennedy has unveiled a reshuffle of his party's frontbench team, demoting Treasury spokesman Matthew Taylor.
Mr Taylor is the highest profile casualty of the reshuffle
The Lib Dem leader has given Mr Taylor the alternative job of parliamentary chairman.
That job was formerly held by Mark Oaten who will replace Simon Hughes as home affairs spokesman.
Vincent Cable - a former oil industry economist - takes over from Mr Taylor while Mr Hughes will now be able to concentrate his efforts on next year's London mayoral campaign.
Mr Hughes remains on the frontbench as spokesman for London.
The changes were interpreted as moving the Lib Dems more to the right-of-centre economically, positioning them to pick up disenchanted Conservative voters.
Responding to his new job Mr Taylor told BBC News Online that he did not accept he had been demoted.
He stressed he would be "key to the strategy" in the run-up to the next election not least because he would be chairing the committee that would be drawing up the party's manifesto.
And he said he would be taking a "big chunk" of his old job as Treasury spokesman with him in terms of a strategic role in developing policy.
"I would have been happy to stay as (Lib Dem) shadow chancellor but I suggested this new role as an alternative.
"I have a long record on policy developing ideas such as the penny on the pound for education and the local income tax."
Paul Burstow - formerly spokesman for older people - moves to health replacing Dr Evan Harris who is stepping down for personal reasons.
International development spokesman Jenny Tonge is being replaced by Tom Brake as she is stepping down from parliament at the next election.
Malcolm Bruce will take on Mr Cable's former post as trades spokesman.
Team for next election
Scotland spokesman John Thurso adds transport to his portfolio.
His predecessor, Don Foster, moves to culture, media and sport replacing Nick Harvey who announced during the summer he would be standing down.
Mr Kennedy said he had "fresh enthusiasm" for the job at hand
Mr Kennedy said: "I am delighted to confirm this revised set of appointments, consisting of the parliamentary team which will take us forward to the next general election.
"The Liberal Democrats go into the new parliamentary season both united and determined, positive and outward-looking.
"We are ready to compete even more effectively with the other two parties and argue with sincerity and persuasion for our vision of an improved Britain.
"The party conference season, which followed the remarkable Brent by-election campaign, has confirmed a Labour government riven with rivalries and a Conservative Party consumed with bitterness.
"The contrast with the liberal Democrats could hardly be more pronounced.
Mr Kennedy added that his new frontbench team had an appropriate blend of experience and youth.
"I look forward with fresh enthusiasm to the great challenges and opportunities ahead."
The move was welcomed by some key Liberal Democrats as "reassurance" their party was not moving to the right.