Hague is new Tory No 2, putting Osborne in shade

The Tory leader gave the shadow foreign secretary a more powerful brief, tasking him to be a chief frontman to speak on both national and international affairs.

The decision to bring Mr Hague into the front line was announced in a joint interview, where the pair sat down with The Sun newspaper.

"William is effectively my deputy in all but name and people need to know that," declared Mr Cameron. "I have been in this job for three years. William did it for four.

"He has seen the pitfalls and is a very wise counsel. It's a good relationship. It has worked extremely strongly."

The decision will delight Tory activists who regard former leader Mr Hague as a hero in the battle against the European single currency and relish his acid attacks on Labour.

There were suspicions, however, that the Right were being thrown a consolation in preparation for the return to the shadow cabinet of pro-European former chancellor Kenneth Clarke, tipped as a possible shadow business secretary. Mr Cameron refused to rule out the recall of Mr Clarke in his interview. Aides today insisted no decision had been taken on the reshuffle.

Mr Hague's new role will see him play a more public role on TV and radio, as well as leading on this year's European election approach. "There's a real opportunity as we go into an election year of William actually carrying a lot of the message to the country, as well as doing the foreign affairs stuff."

Labour hailed the move as a "humiliation" for George Osborne, claiming that it showed the shadow chancellor being superseded in the power structure of the Tory high command.

Labour MP Karen Buck said: "This is a clear example of George Osborne being made to walk the plank for his do-nothing economic incoherence." But Mr Cameron's allies said there was no reduction in Mr Osborne's role or importance.

The Tory leader said: "George has been a good friend of mine for 12 years, through thick and thin. I won't tread on George's toes. There's enough space out there for several people to be busily engaged."

The Conservative leader's inner circle

George Osborne - The shadow chancellor is still Mr Cameron's closest Tory partner, say colleagues, despite him taking some knocks in the autumn. The friends plotted the Notting Hill-isation of the party together. Since the row over his trip to Oleg Deripaska's yacht, Mr Osborne has been dogged by speculation that he could be replaced. Senior Cameroons scoff at the idea.

Oliver Letwin - Underestimated by outsiders, Letwin's key role in charge of the Conservative policy review has made him an essential part of the inner circle. The former Rothschild banker is consulted all the time on policy detail and has a huge say. Charmingly eccentric, he is kept in the background.

William Hague - Mr Hague has long been a valued adviser, sharing his experience of avoiding bear-traps as a former Tory leader. The decision to give him a more public campaigning role will advertise the steely Right-winger as a key influence on future thinking.

Steve Hilton - The jeans-clad Tory director of strategy spends most of his time in America where partner Rachel Whetstone is a VP of Google. Using a laptop and phone to keep in touch, he manages to provide advice on soundbites and strategy as well as being a best mate of "Dave".

Andy Coulson - The former editor of the News of the World was recruited to beef up the party's media presentation as director of communications and has increased his influence. He attends all key long-term strategy meetings and oversees the daily battle for headlines.

Ed Llewellyn - Mr Cameron's chief of staff is the most important of a string of capable and influential backroom figures, including his deputy, Catherine Fall. A former schoolfriend, his CV echoes his leader's own life.