In a surprise turn of events, former New South Wales Premier Bob Carr will join the Senate and take the role of Foreign Minister in the wake of Kevin Rudd’s failed leadership challenge.
Mr Carr will fill the ministerial position vacated by Kevin Rudd, who now sits on the back bench after failing to win a leadership ballot against Ms Gillard.
"You don't choose the moment, very often the moment chooses you," Mr Carr told reporters in Canberra.
Mr Carr said he would seek Mr Rudd's advice on some matters, such as Australia's relations with Burma.
Ms Gillard was announcing her second ministerial reshuffle in three months.
Kate Lundy has been promoted, to minister for sport and multicultural affairs, as well as assistant minister for industry and innovation.
David Bradbury has also been promoted to the ministry as assistant treasurer, and to the newly created position of minister assisting for deregulation.
Jason Clare will take on the additional portfolio of minister for defence materiel.
Kim Carr will move to the human services portfolio.
Kevin Rudd supporter Robert McClelland has been demoted to the back bench.
Ms Gillard said Stephen Smith would remain as defence minister.
Dr Emerson will also take on an expanded role of Minister for Trade and Competitiveness, paying particular attention to increasing Australia's international economic competitiveness, with a focus on the Australia in the Asian Century White Paper.
Brendan O'Connor moves into cabinet, to take the position of Minister for Small Business, as well as Minister for Housing and Homelessness.
Attorney-General Nicola Roxon takes on the additional portfolio of Emergency Management.
Environment Minister Tony Burke will take on the additional role of Vice-President of the Executive Council.
Mr Carr's appearance at the ministerial announcement was a surprise.
His name was raised earlier this week in relation to the senator vacancy and the possibility of his taking foreign affairs.
But, as the week wore on, it appeared less likely.
Mr Carr said there were conflicting emotions as he considered the offer.
"I was churned up, I was in two minds," he told reporters.
Mr Carr said it would be a big change to the life he and his wife currently enjoyed in Sydney.
"There were warring emotions in my thoughts," he said.
"But, in the end, when the distinctive voice of Prime Minister Gillard rouses you from your slumber and says will you be foreign minister of Australia, I couldn't have found it in me to have said no."
Mr Carr confirmed he would seek re-election as a senator at the next election.
"I was offered the opportunity to sign on for more public service and I couldn't say no," he said.
He paid tribute to Mr Rudd as a fine foreign minister.
Asked if he would do anything differently to Mr Rudd, Mr Carr said: "I wouldn't nominate anything now".
But, as he feels his way through the portfolio there would, inevitably, be changes of emphasis, he said.
Mr Carr said he hoped to garner more bipartisan support from the opposition on foreign policy questions.
He said he had a co-operative relationship with coalition foreign affairs spokeswoman Julia Bishop.
