Mr Rudd will focus on education, environment and the economy

He appointed Julia Gillard as deputy PM and education minister, and a former rock star, Midnight Oil singer Peter Garrett, as environment minister.

Penny Wong becomes the country's first Asian-born minister, with responsibility for climate change.

Meanwhile, the Liberal Party has elected a new leader to replace John Howard, defeated in last week's vote.

Brendan Nelson, the outgoing defence minister, beat the outgoing environment minister Malcolm Turnbull for the job.

Rock on

Kevin Rudd has not yet been sworn in as Australia's next prime minister, but he is impatient to tackle what he describes as the challenges of the future.

LABOR'S CABINET Deputy Prime Minister and Minister for Education and Workplace Relations: Julia Gillard Treasurer: Wayne Swan Foreign Minister: Stephen Smith Environment, Heritage and Arts Minister: Peter Garrett Climate Change and Water Minister: Penny Wong Minister of Defence: Joel Fitzgibbon Attorney-General: Robert McClelland

In naming his ministers, it is clear that the "three Es" are his main priority - the economy, education and the environment, says the BBC's Nick Bryant in Sydney.

By far the most eye-catching appointment is that of Peter Garrett as environment minister, our correspondent says.

Mr Garrett, who has been an MP since 2004, is best known as the former front man of rock group Midnight Oil, who had an international hit with the song Beds Are Burning.

Penny Wong, a Malaysian immigrant, has been named Australia's first minister specifically dedicated to climate change and water conservation.

Opposition changes

At the same time as Mr Rudd announced his new ministry, the Liberal Party has elected a new leader to replace John Howard.

Mr Garrett was first elected to parliament in 2004

With the party's former deputy leader Peter Costello signalling his desire to pursue a career in the commercial sector, the Liberals opted for Brendan Nelson, the outgoing defence minister.

He beat the expected favourite, outgoing environment minister Malcolm Turnbull, by a narrow vote of 45 to 42 .

Mr Nelson likes electric guitars, fast motorbikes and used to wear an earring. But his political persona is nowhere near as racy.

He is a medical doctor, and the beleaguered Liberal Party will need all of his recuperative powers, our correspondent says.