Mr Albanese is expected to announce the reshuffle within days to transfer health spokesman Chris Bowen into the climate portfolio.
Mr Bowen, the party’s treasury spokesman at the last election, is said to be keen to take on climate and energy.
Labor insiders dismissed talk of Mr Albanese’s leadership being in question in the reshuffle, pointing to support for him in the left faction, the NSW right and the Victorian right.
Mr Butler takes on health and ageing at a key point in the pandemic, with the government facing questions over its vaccine rollout and its aged care policies ahead of the final report from the royal commission into the sector.
Senior figures portrayed Mr Butler’s new position as a central portfolio given the pandemic and given his experience as aged care minister in the Gillard government.
The change from Mr Butler to Mr Bowen will mark a shift in ownership of the climate portfolio from the left faction to the right of the party after a stand-off last year when the resources spokesman at the time, Joel Fitzgibbon, argued against setting an interim target for 2030 or 2035.
While Mr Albanese has pledged to achieve net-zero emissions by 2050 under a Labor government, some caucus members believe there is no need to set an interim goal that could make the party a bigger target at the next federal election.
Labor’s pledge at the last election, to reduce emissions by 45 per cent by 2030 compared to the Morrison government’s target of 26 to 28 per cent, remains in limbo until a decision is made on whether to recommit to it or update it for 2035.
Mr Fitzgibbon, who stood down from the resources portfolio after his clashes with Mr Butler at the end of last year, welcomed the news about the reshuffle but signalled he wanted a change on policy as well.
“Obviously I welcome the change,” he said.
“We have to send a clear signal to our traditional base that we are back, and this is a good start.
“But changing the jockey will not be enough in the absence of a shift in policy emphasis, calibration and language.”
Mr Albanese backed Mr Butler last November when some caucus members wanted him moved after the disputes with Mr Fitzgibbon.
“Yes, Mark Butler will remain as our climate change and energy spokesperson. Mark Butler is doing a fantastic job in that role,” Mr Albanese told reporters on November 13.
Mr Butler declared last year the party should go to the next election with an interim target to show how a Labor government would deliver net-zero emissions over the longer-term.
“You can’t set a mid-century target and then check in 2049 whether you’re on track to meet it. No one thinks that,” Mr Butler said in September.
Mr Fitzgibbon rejected that argument and the interim target remains to be decided.