Charles Clarke moved from education to replace Mr Blunkett while David Miliband, the school standards minister, took on Ms Kelly's Cabinet Office post.
Ms Kelly, 36, a privately-educated mother of four, is the youngest Education Secretary ever and the youngest member of Blair's Cabinet. She worked at the Treasury then at the Cabinet Office where she was number two to Alan Milburn. There the former Guardian journalist worked with him on planning for the next election.
Mr Blunkett has been under fire after claims that he fast-tracked a visa application for the nanny of his former lover Kimberly Quinn. The 1997 to 2001 education secretary had also criticised ministers in interviews for a biography.
Mr Clarke became education secretary in 2002 after Estelle Morris's resignation. He had a less rocky ride in the post but he still faced headteachers' anger over funding last summer. He secured an agreement to modernise working practices with all but one of the teacher unions. His legacy is likely to be his success in persuading MPs to back top-up fees.
Teacher unions said Mr Clarke and Mr Miliband were "trustworthy" ministers.
Mr Blunkett resigned after the visa allegations inquiry found there had been an exchange of emails about the application between his office and immigration officials.
Conor Ryan, Mr Blunkett's former political adviser, said: "David has left an enormous legacy as education secretary particularly in terms of the literacy and numeracy strategies in primary schools, and in the start of the reform of secondary schools."
News 2, Leader 14