David Lammy is set to be replaced as Deputy Prime Minister by Labour deputy leader Lucy Powell as Andy Burnham seeks to boost the number of women at the top of his team.

Ms Powell, a long-standing Burnham ally, will be handed the role after she helped guide the former Greater Manchester mayor to the brink of Downing Street.

She was instrumental in ensuring Mr Burnham secured the nomination for the crucial Makerfield by-election against the opposition of No 10, and is believed to have assisted in brokering talks with Sir Keir Starmer on Tuesday in an attempt to ease the transition.

According to one Burnham ally: 'Andy wants to see the role of deputy Prime Minister and the Deputy Leader realigned.'

Mr Lammy has held his PM-appointed position since September. While largely ceremonial, it will see Ms Powell deputising for Mr Burnham at Prime Minister's Questions and representing him at diplomatic events. The move comes amid MPs' fears that Labour will be widely criticised for opting for yet another male leader.

A government source said: 'Andy knows he's going to take a hit over the fact the party has gone for another white bloke. Filling the top jobs with capable women is seen as a way of offsetting that.'

To offset the charge of 'jobs for the boys' there is some discussion about ensuring all four major offices of state – Chancellor, Foreign Secretary, Home Secretary and Defence Secretary – are given to women. There had been speculation that Rachel Reeves would be sacked as Chancellor, and replaced by Environment Secretary Ed Miliband. But this has been met by a backlash among unions and the parliamentary Labour Party.

According to government sources, consideration is being given to a 'job swap' between Ms Reeves and Foreign Secretary Yvette Cooper.

Home Secretary Shabana Mahmood is also believed to be lobbying for the Chancellor role.

A minister said: 'Shabana had been briefing that she wanted to stay at the Home Office. But that was basically to pre-empt moves by Keir Starmer to dump her. Now she's letting it be known she would be prepared to accept a move to the Treasury if that was offered.'

Ms Cooper is believed to be a favourite to move into No 11. She is respected by Team Burnham, although she has reportedly said she would prefer to remain in her current role.

There had been reports John Healey would return to the position of Defence Secretary following his dramatic resignation. But Mr Burnham's allies are reported to be concerned that it would tie their hands financially, because they would have to agree to Mr Healey's demand for a dramatic increase in defence spending.

A source said: 'It's going to be a struggle to find the resources necessary for the uplift in spending Starmer was proposing. If we gave John what he's asking for, it would effectively bankrupt us.'