Former prime minister Kevin Rudd is foreign minister in the cabinet that Prime Minister Julia Gillard is expected to announce Saturday, dpa reported.
Gillard, who deposed Rudd in June, claimed a second term this week after securing the support of independent parliamentarians to form a Labor-led minority government.
Rudd, the Mandarin-speaking former diplomat who was foreign affairs spokesman before leading Labor to victory over John Howard's conservatives in 2007, was promised to job in return for supporting Gillard in the run-up to the August 21 parliamentary election.
Gillard's spokesman said the 52-year-old Rudd would displace Stephen Smith, who moves to the defence portfolio relinquished by John Faulkner, who is retiring.
Smith described his new job as "a heavy burden, a heavy obligation" and said he accepted Gillard's right to reshuffle her team following last month's election.
Smith becomes Labor's third defence minister in three years.
Trade will go to former consumer affairs minister Craig Emerson in a limited cabinet realignment forced on Gillard by the need to deliver on her promise to Rudd.
Many have questioned the wisdom of the appointment to chief diplomat, given that Rudd's autocratic and abrasive style cost him the prime ministership.
Australian National University professor Hugh White was among those cautioning against a return he called "risky" because it would not be welcomed in the region nor in the foreign affairs department where Rudd was widely despised.
Rudd, the first prime minister not to complete a first term, had "revealed significant weaknesses in making decisions and in an ability to focus on the big issues consistently."
White, a former senior defence ministry official, said Rudd's "foreign policy achievements as prime minister were pretty scanty - and that's rather generous."
Others have argued that Gillard would show wisdom in giving the foreign affairs portfolio to Rudd, noting that it would keep him out of the country for much of the time and give her the latitude to focus on affairs in Canberra and keeping her minority government together.