Michael Howard has dramatically reduced the size of his Shadow Cabinet in a reshuffle which gears the Tories up for a "hard slog" towards the next election.

The top team has been reduced to just 12 members - with several frontbenchers effectively being relegated to a new second division.

The dozen senior Conservatives will become "team leaders" as part of a dramatic shake-up of the high command - and other leading Tories will be brought out of retirement to form an "advisory council".

But Howard failed to woo back any of the Tory "big beasts" to his Shadow Cabinet.

One of the most controversial moves sees the areas of health and education being merged into one portfolio under the stewardship of Tim Yeo.

Former party chairman Theresa May, who was removed from Smith Square on Sunday, becomes the environment and transport spokesman inside the Shadow Cabinet.

Many had expected that May, now the only woman to sit around the "top team" table, was set for demotion or dismissal.

Howard is said to believe that shrinking the top team will give its members a better chance of becoming known in the country at large.

The new leader hopes the public will relate to a smaller, more high profile team of senior Conservatives.

"This shadow team is a radical departure from past practice," said Howard. "The role of opposition is very different from the role of government.

"There is therefore no reason for the opposition to mirror the structure of the government.

"Today's changes represent an explicit recognition that the Conservative Party needs greater flexibility in our parliamentary structures if we are to be able to challenge the government effectively at Westminster.

"More importantly, these changes will enable us to use the pool of talent we have more efficiently, in order to take our case out to the country and show how Conservative policies can provide a creative, workable and, above all, effective alternative to a failing Labour government."

Observers say the Shadow Cabinet is being modelled along the lines of a board of directors, where management responsibilities are clearly defined.

But others fear moves such as the merger between health and education will lead to Labour attacks on the Tories' commitment to public services.

Health secretary John Reid immediately took to the airwaves to accuse Howard of downgrading responsibility for key public services.

The shake-up sees loyalty being rewarded - although it also confirmed that Howard stepped back from making pre-election deals with his colleagues.

Oliver Letwin becomes the shadow chancellor, filling the vacancy created by Howard's promotion.

Letwin's gentle but analytical style is likely to contrast with Howard's robust attacks on the chancellor. But his gaffe-prone reputation means he is likely to be micro-managed by the party leader in the early days shadowing Gordon Brown.

He said the reshuffle revealed a "willingness to lead from the centre". "There is a sense that we have to pull together," said Letwin.

David Davis, who stood aside to give Howard a clear run for the leadership, takes on the role of shadow home secretary.

He will also take responsibility for shadowing the Department for Constitutional Affairs.

Davis will be supported by Alan Duncan, who takes the number two position of "shadow constitutional affairs secretary" in the home affairs team.

Shadow work and pensions secretary David Willetts has been given the task of overseeing policy development ahead of the general election.

Dubbed "two brains", Willetts is charged with drawing up the manifesto for a general election which could be just 18 months away.

Michael Ancram heads up a beefed-up foreign affairs role - taking over control of international development and defence.

Some had thought he was set to be retired to the backbenches after serving throughout the party's period in opposition.

Europhile MP David Curry becomes shadow local government and devolved regions minister.

He will be supported by Bernard Jenkin who is demoted to the position of shadow minister of the regions.

Chief whip David Maclean, who had announced that he was stepping down, has been reappointed to his current post.

He initially quit the whips office after becoming too directly associated with Iain Duncan Smith in his battle against leadership plotters.

But Eric Forth, the outspoken leader of the Commons, has been sacked and is now destined for the backbenches.

Andrew Lansley and John Bercow both make a return to the frontbench, taking health and international development roles respectively.

Up-and-coming MP David Cameron takes the first step up the promotional ladder, becoming a deputy party chairman.

But it was not all plain-sailing for the new Conservative leader, who found his advances rebuffed by a series of senior MPs.

Neither William Hague, Kenneth Clarke nor Michael Portillo are rejoining the frontbench.

Reducing the size of the Shadow Cabinet also resulted in several MPs being put into the second division.

Nigel Evans, the shadow Welsh secretary, is thought to have resigned from the frontbench after seeing his role downgraded.

Former health secretary Stephen Dorrell, one of the Conservative "big beasts" to come out in support of the new leader, turned down an offer to rejoin the Tory frontbench.

He was also said to believe the role on offer was too junior.

Former Home Office minister Ann Widdecombe is said to have turned down a job offer - thought to be the position of shadow international development secretary.

Sources say Howard felt he had to offer Widdecombe a role but ensured she did not accept by making his offer sufficiently unattractive.

Alongside the trimmed down Shadow Cabinet will be a new committee of Tory elder statesmen who will campaign for the party.

The new advisory council comprises John Major, William Hague, Kenneth Clarke and Iain Duncan Smith - with the final three speaking from the frontbench "from time to time".

Howard said the committee will help the party make "full use of the rich array of talent in the Conservative Party".

As he seeks to mould the party in his own image, Howard also overhauled the Central Office machine by splitting the role of Tory chairman between Dr Liam Fox and Lord Saatchi.

Dr Fox, the former shadow health secretary, said the move would assist the party in getting its message across.

Under the new approach Dr Fox will take over as "first co-chairman" with the task of "re-invigorating the party's media operation, its campaigning wing and its policy unit".

Advertising guru and multi-millionaire Lord Saatchi will become "second co-chairman" with responsibility for internal issues affecting Central Office and revamping the party's electoral machine.

"Many people have felt that the job of chairman has become too entangled in administrative and internal issues inside Central Office with too little focus therefore being given to the political message, the development of policy and the modernisation of campaigning techniques," said Dr Fox.

The reshuffle follows a series of opinion polls which indicate that the party has failed to capitalise on Howard's appointment.

The latest poll showed that Howard failed to dent Labour's poll lead.

The Populus poll for the Times puts support for Labour on 36 per cent.

The Conservatives meanwhile remain on 31 per cent and the Liberal Democrats on 25 per cent.