Prime Minister Scott Morrison is preparing to appoint one of the government's most senior figures as Australia's new ambassador to the United States.

The Sydney Morning Herald and The Age understand NSW senator Arthur Sinodinos - a highly respected former cabinet minister and chief of staff to John Howard - will replace Joe Hockey as the nation's top international envoy.

NSW senator Arthur Sinodinos is a former cabinet secretary and former chief of staff to John Howard. Credit:Janie Barrett

Communications Minister Mitch Fifield, who was expected to be demoted from Mr Morrison's new-look cabinet on Sunday, will be appointed Australia's representative at the United Nations - a role typically occupied by career officials from the Department of Foreign Affairs and Trade.

An announcement will be made at Parliament House on Sunday afternoon.