Japanese Prime Minister Junichiro Koizumi named a new Cabinet Monday, replacing several key members — including his ailing finance minister — in a bid to consolidate his power and breathe new life into efforts to turn around Japan's sickly economy.

The reshuffle comes two days after Japan's popular leader won re-election to a three year term as head of the ruling Liberal Democratic Party. Emboldened by the new mandate, Koizumi has vowed to move ahead with his efforts to cut government spending and carry out broad structural reforms.

As expected, Koizumi replaced ailing Finance Minister Masajuro Shiokawa, who is 81. Appointed to the post was Sadakazu Tanigaki, who previously held the public security portfolio.

In a surpise move, however, Koizumi retained controversial adviser Heizo Takenaka, a former university professor, as both minister for economic policy and minister of financial services.

Takenaka's tough stance on cleaning up the huge pile of bad debt amassed by Japan's banks has made him unpopular with many in the party but has been welcomed by economists and investors.

Though he won re-election by a wide margin, Koizumi was under intense pressure to replace members of his current Cabinet who were selected not from within the ruling party but from the private sector.

Takenaka, a former university professor, is among that group, as is Foreign Minister Yoriko Kawaguchi and Education Minister Atsuko Toyama.

Koizumi replaced Toyama with Takeo Kawamura, entering the Cabinet for the first time, but to the surprise of many chose to retain Kawaguchi as foreign minister.

Naming a Cabinet in Japan has traditionally involved a careful balancing act, giving each of the party's main factions positions that reflect their relative strength. Koizumi was under pressure to appease the biggest faction within his party by giving it a high-profile presence in the 18-post Cabinet.

Koizumi, who assumed the party leadership in April 2001, once again bucked that tradition, and loaded the Cabinet with allies or private-sector experts who have no factional allegiance.

Instead of factional support, he has relied on his personal appeal.

He remains one of the most popular leaders Japan has seen in decades, though his support has fallen from over 80 percent to around 50 percent in recent weeks.

Recharged by his re-election landslide, Koizumi has indicated he would like to call parliamentary elections as early as November, setting up a long-awaited showdown with Japan's political opposition that could further bolster the ruling party's power in Parliament.

The opposition has been scrambling to regroup ahead of the polls, and the two largest opposition parties are expected to officially join forces later this week.

With that battle in mind, Koizumi has moved quickly to consolidate his position by packing key positions with allies.

Along with the Cabinet appointments, Koizumi has already installed two allies in top party posts. His choice of Shinzo Abe, a popular 49-year-old member of the party cadre who has never held a Cabinet level position, for the No. 2 post has been hailed as both bold and savvy.

Abe, the grandson of former Prime Minister Nobusuke Kishi, is a telegenic and outspoken advocate of pushing a hard line with North Korea, a position that has won him wide support among Japanese voters.

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