Senator McCarthy will take over the Indigenous Australians portfolio while Home Affairs Minister Clare O'Neil and Immigration Minister Andrew Giles have been dumped from their portfolio.

Ms O'Neil has been moved to housing and homelessness, but remains in cabinet.

Mr Giles has moved to skills and training in the outer ministry.

Tony Burke will take up home affairs and immigration, with the latter being elevated into cabinet from the outer ministry.

The two sackings follow a political headache for the government over the handling of a High Court ruling that released more than 150 former detainees.

The opposition has been calling for heads to roll over the handling of the saga, arguing more should have been done to keep the detainees locked up despite the highest court ruling indefinite detention was illegal.

Murray Watt will move on from agriculture to take up Mr Burke's old portfolio of employment and workplace relations. Julie Collins will become agriculture minister, moving back to the portfolio she held in opposition.

Pat Conroy retains his defence industry and Pacific portfolios as he moves into cabinet. Jenny McAllister will move into the outer ministry, picking up the cities and emergency management portfolios after serving as an assistant minister.

As part of the reshuffle, Kate Thwaites, Julian Hill and Josh Wilson have been elevated into the assistant ministry.

The reshuffle was spurred by the retirement of cabinet ministers Linda Burney and Brendan O'Connor, who won't recontest the next election, while assistant minister Carol Brown also stepped back from the role due to health reasons.

The new-look ministry will be sworn in on Monday.

A delicate factional balance needs to be maintained under internal Labor processes, with all retirements from the Left.