Malarndirri McCarthy - who will take on the Indigenous Australians portfolio - and Pat Conroy will move into cabinet as part of the rejig.
Mr Conroy has retained the defence industry and Pacific portfolios he held in the outer ministry.
Minister for the Defence Industry and the Pacific Pat Conroy (centre) enters the frontbench line-up. (Mick Tsikas/AAP PHOTOS)
The cabinet newcomers replace former Indigenous Australians minister Linda Burney and former skills minister Brendan O'Connor, who will step back from politics at the next election, which is due by May 2025.
Jenny McAllister has been promoted into the outer ministry in the cities and emergency management portfolios.
Tony Burke has picked up the home affairs and immigration portfolios from Clare O'Neil and Andrew Giles after they struggled with the political fallout from a High Court case.
Murray Watt takes up Mr Burke's old job as employment minister, with his agriculture portfolio passed to Julie Collins.
Ms O'Neil remains in cabinet as the housing and homelessness minister while Mr Giles takes on skills and training in the outer ministry.
The opposition has criticised the changes, with Deputy Liberal leader Sussan Ley saying skills was too important a portfolio to be given to Mr Giles as a "consolation prize" after being dumped from immigration.
Liberal Sussan Ley says dumped immigration minister Andrew Giles is receiving a "consolation prize". (Mick Tsikas/AAP PHOTOS)
"The appointment of Andrew Giles is completely unacceptable," she said.
Prime Minister Anthony Albanese refused to concede moving his home affairs and immigration ministers equated to a political scalping as the opposition claimed they were dumped for incompetence.
"There's a change that then has a knock-on effect," he said when he announced his new cabinet line-up.
Nationals Leader David Littleproud said Labor's policies would not change under a cabinet minister installed to "toe the line" in Ms Collins, who he said made no friends when she held the portfolio in opposition.
"Julie Collins has no interest in agriculture and has been punished for her poor performance in housing," he said.
But Mr Albanese has defended his team, saying people stepping down meant others had the opportunity to step up.
I am proud to lead a talented and united cabinet government that is focused every day on continuing to deliver better outcomes and more opportunities for all Australians. — Anthony Albanese (@AlboMP) https://t.co/3zML0p0dOx pic.twitter.com/bANKFROVbcJuly 28, 2024
He lauded the stability of his team which had served for two years without the need for a reshuffle.
"We have now had an opportunity as well to have some refresh going forward with some entry of some new talent," he said.
"'I've got to say that we are blessed.
"There are a range of people who could have been promoted - I think that we could produce a second or third cabinet that would be stronger than the shadow cabinet that we face."
The ministers will be sworn in at Government House on Monday before the new-look cabinet meets for the first time at Parliament House.