Former NSW premier Bob Carr will join the Senate and become foreign affairs minister, Prime Minister Julia Gillard says.
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.
Until he takes his place in the Senate, Craig Emerson will continue to act as minister for foreign affairs.
Blog post: Gillard lists changes
Mr Carr said he could not say no to an offer to perform more public service.
"You don't choose the moment, very often the moment chooses you," he told reporters on Friday 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 on Friday.
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 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 senate 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 now enjoy 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 compared 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 cooperative relationship with coalition foreign affairs spokeswoman Julia Bishop.
Ms Gillard said she had offered Mr Carr the Foreign Affairs portfolio on Thursday.
"And I am delighted he accepted it," she said.
Mr Carr said he was an admirer of the prime minister "and her steadfastness under pressure".
"She asked me to serve my country ... how could I say no to that?"
Mr Carr did not believe the gap in opinion polls between Labor and the coalition was as great as the gap on past occasions, when a government had come from behind to win an election.
"As people focus on the sloganeering rather than policy making of the coalition, and especially its leader Tony Abbott, they'll think deeply about a change of government," he said.
"Australia getting through the GFC (global financial crisis) as it's done - that progress shouldn't be put at risk by handing things over to a team that hasn't got policies, but only slogans."
Mr Carr said he would also seek the advice of former Labor foreign minister Gareth Evans and former prime ministers John Howard, Malcolm Fraser and Gough Whitlam on foreign policy.
Mr Carr said tending to Australia's region would be his first priority.
The avowed lover of US politics and history also spoke about the US-Australia relationship.
"Our debates with the Americans about matters of relative emphasis can be conducted vigorously and in a friendly spirit in the future as they've been in the past," he said.
Asked if he had any aspirations for the Labor leadership, Mr Carr was clear: "No."
Mr Carr said a focus on Asia would be an immediate priority when he became foreign minister.
"Obviously the rise of China and India means the developing world is generating an astonishingly large proportion of global economic activity," Mr Carr said.
"These are the revolutions of our times and it makes Australia's position so rivetingly interesting."
Asked about what this meant for US-Australia policy, he said little would change.
"A lot of hard policy slog lies in fine tuning Australia's response to that (Asia) and remembering always the sanctity, as Australians see it, of our treaty relationship with the United States."
Mr Carr left his post as NSW premier six years ago.
"I feel pretty fit and full of ideas ... even at this late hour."
When he becomes senator, Bob Carr will join another Senator Carr in the upper house - Kim Carr.
