"In order to carry out the interests of the state and entire people more effectively, the SPDC has appointed Gen Khin Nyunt as the Prime Minister in effect from today," the statement read from the junta’s mouth-piece radio and television apparatus.

Army Chief Gen Maung Aye took over the position of vice president, and Secretary-Two Soe Win will fill Khin Nyunt’s position as Secretary-One of the SPDC. Former Eastern Region commander Thein Sein will in turn replace Soe Win.

The political situation in Burma has been tense since the crack down and arrest of democratic leader Aung San Suu Kyi on May 30 in upper Burma, which triggered international outrage and the implementation of economic sanctions from the international community.

According to some Burma analysts, Khin Nyunt's shock demotion from the powerful intelligence boss to the largely ceremonial position of prime minister, which was one of the many titles held by Than Shwe, represents a power shift to hard-line elements in the regime. Than Shwe was accused of ordering the arrest of democratic leader without informing his lieutenants, the sources said.

Khin Nyunt, 64, is viewed as outward looking, one of the more moderate figures in the repressive regime, and the general responsible for handling a UN-sponsored national reconciliation process with Suu Kyi.

The reshuffle also trimmed off the old and brought young officers into the cabinet line-up, including U Ko Lay and Thein Shwe as ministers to the PM's Office, Myint Maung as religious minister, Thein Aung as forestry minister, and Hpay Oo as cooperatives minister.

The United States called on Burma's reshuffled political leadership to immediately take steps to ease what it calls an "intolerable" political situation.

The US State Department deputy spokesman Philip Reeker says the international community has made it quite clear that it wants to see a change in direction in Rangoon. He says that should include the release of Aung San Suu Kyi and all other political prisoners, as well as the restoration of democracy.

The architect of the reshuffle, Senior Gen Than Shwe remains the most powerful figure in Burma as chairman of the junta and military commander-in-chief.