LONDON, England (CNN) -- Prime Minister Tony Blair axed his under-fire law and order minister and demoted his foreign secretary in a wide-ranging Cabinet reshuffle after his party was humiliated in regional elections.

Friday's shake-up follows a string of political setbacks that have undermined the prime minister's authority and intensified calls for his resignation as he enters his 10th year in power.

Home Secretary Charles Clarke, who was recently forced to apologize for a scandal over the deportation of foreign prisoners was to be replaced by Defense Minister John Reid, a government statement said.

Blair removed Jack Straw as foreign secretary, replacing him with Environment Minister Margaret Beckett -- the first woman in the role.

In a surprise move, Straw was demoted to become leader of the lower house of Parliament. Rumors of tension have often been reported between Straw and Blair -- some reports said the outgoing foreign secretary had privately expressed doubts about the Iraq war, and publicly took a different position on Iran to Blair. Straw had described a military strike against Tehran as "inconceivable" and the reported U.S. contingency plans for a tactical nuclear strike as "completely nuts."

Blair's trusted deputy, John Prescott, who caused embarrassment with the recent admission of an extramarital affair, kept his job, but was stripped of his own department. Other changes include:

Des Browne promoted from chief secretary at the Treasury to secretary of defense.

Former defense secretary Geoff Hoon made Cabinet minister for European affairs within Foreign Office.

Clarke, who returns to the government backbenches, said he was leaving the job with "deep regret" after just 16 months, but the prime minister had told him that keeping him in position would "stand in the way" of reform in the wake of the scandal.

Blair's reshuffle appeared to be an attempt to stamp his authority over his troubled Labour party after Thursday's local authority elections, which saw it lose ground to a resurgent opposition Conservative party.

In incomplete results, Labour took 1,065 seats, down 251 from the last elections, while the Conservatives won 1,567, up 249. The far-right British National Party won 13 seats, The Associated Press reported.

"This is as bad as we've seen the whole time Tony Blair has been party leader," CNN European Political Editor Robin Oakley said.

But he predicted that the poor showing would not result in an immediate exit for Blair, despite the repeated calls for his departure.

"It is not the meltdown some people have predicted, and it doesn't mean Tony Blair will step down tomorrow," he said.

During his campaign for a third term last year, Blair pledged not to stand again as party leader in the next general election. But that election isn't expected until 2009 or 2010, and he has so far refused to be pinned down on a date to step aside.

Margaret Beckett arrives at Downing Street on Friday.Thursday's vote marked the first test for Cameron, a telegenic 39-year-old who was picked in December to try to lead his once-dominant Conservative Party out of nearly a decade in the political wilderness.

Cameron's rise has been abetted by the recent scandals that have dogged Labour, including a nasty row over revelations that more than 1,000 criminals from countries were released from British prisons without being considered for deportation.

Controversy brewing

Blair had resisted demands to sack Clarke, whose department was responsible for the releases.

As that controversy was brewing, Prescott was forced to acknowledge his affair with a woman in his department after photographs of the pair were splashed across tabloid newspapers.

Police are also investigating whether seats in the House of Lords, the unelected upper chamber of Parliament, were doled out to financial backers in return for loans to the Labour Party.

And Blair and his ministers have also had to deal with fallout from controversial health service reforms that recently prompted nurses to publicly boo and heckle Health Secretary Patricia Hewitt.

Blair, who turns 53 on Saturday, became prime minister in 1997, after leading his party to a landslide victory that ended 18 years of Conservative rule. He was re-elected in 2001 and then again last May, becoming the first Labour leader to secure three terms in office.

However, with his popularity sapped by his support for the invasion of Iraq and close alliance with U.S. President George W. Bush, Blair's 2005 victory was somewhat anemic. Labour captured just 35 percent of the vote and lost 47 seats, although it still maintained a parliamentary majority.

Blair's replacement as Labour leader is widely expected to be Treasury chief Gordon Brown, 55.