A revamp of the Government's top team removes a potential obstacle to plans for the next generation of nuclear-armed submarines which promise to safeguard thousands of jobs in Plymouth.
The Coalition reshuffle saw the sacking of the only Liberal Democrat Minister at the Ministry of Defence.
Nick Harvey had been leading a review looking at whether there are cheaper alternatives to building the new missile-carrying vessels, which carry a price tag of £20 billion.
Replacing Britain's nuclear deterrent has proved a flashpoint for the coalition with Liberal Democrats opposed to "like-for-like" replacement and Conservatives committed to a full renewal of the UK's fleet of four Vanguard-class submarines by 2028.
The removal of Mr Harvey – in an apparent trade for another post at the Department for Environment – has been viewed by some as signalling the party abandoning its opposition to Trident.
But the Lib Dems insist the work on the Trident review will continue under David Laws, who returns to government as education minister more than two years after he resigned over an expenses scandal.
Alison Seabeck, Labour MP for Plymouth Moor View and Shadow Defence Minister, also said the move could be designed to distance the party from the MoD in the run up to the next election, leaving it free to oppose plans for the renewal of Trident unhindered.
Speaking after losing his ministerial position, Mr Harvey said: "Nick Clegg made it clear that the decision was not a reflection on my performance in the job, which he said was widely regarded as having been excellent, but rather a strategic political decision to 'trade' this post for one in another government department."
Mr Harvey was replaced by Andrew Robathan who was promoted within the MoD from junior ministerial level to Minister of State for the Armed Forces.
In return the Lib Dems gain a post at the Department for Environment, which it is understood will be taken by David Heath.
Moves to replace the four ageing Vanguard-class vessels which currently carry the Trident missiles have major implications for the city.
Devonport is the UK's only base with the specialist facilities and skilled workforce needed to maintain the current and future submarine fleet.
The final "main gate" decision on Trident renewal will still not be made until 2016, but long lead times mean some contracts need to be signed now, including for the reactors to power the vessels.
In other changes Environment Secretary Caroline Spelman lost her job to be replaced by Owen Paterson – a strong supporter of fox-hunting – who previously held the Northern Ireland brief.
Employment Minister Chris Grayling was promoted to Justice Secretary, replacing veteran Ken Clarke, who will become minister without portfolio.
Justine Greening, who opposes a third runway at Heathrow, was moved from transport to international development.
Jeremy Hunt was also rewarded after a successful Olympics, being shifted from culture to become Health Secretary, despite controversy over his handling of the BSkyB takeover bid.
Maria Miller had one of the biggest promotions, becoming Culture Secretary after previously serving as minister for the disabled.
Theresa Villiers, formerly transport minister, was appointed Northern Ireland Secretary.