Toledo, who is Peru's first democratically elected leader of Indian descent, has seen his popularity plunge to below 20 percent amid charges he has not kept campaign promises and been indecisive.

On Friday, Toledo named Luis Solari, a key figure in the ruling Peru Possible Party, as prime minister and chief of the Cabinet. He replaced Roberto Danino, an independent former Washington, D.C. lawyer whose management was said to have alienated some party leaders.

Javier Silva Ruete, a two-time economy minister, assumed the post again from Pedro Pablo Kuczynski, a U.S. investment banker and former World Bank official whose free-market economic program had sparked frequent protests.

At the swearing-in ceremony in the government palace, Toledo called the Cabinet overhaul "the first step in the relaunching of the democratic government that I preside over."

Many Peruvians have clamored for the president to fulfill his promise to create hundreds of thousands of jobs and revitalize the stalled economy. Toledo has also been criticized for indecisiveness.

Toledo also swore in Allan Wagner as foreign minister, a post he held during the 1985-90 government of Alan Garcia. Wagner was previously Peru's ambassador to the United States. He replaces Diego Garcia Sayan.

His appointment was seen as an attempt to reach out to Garcia's Aprista Party, which is now the leading opposition force in Congress. Garcia lost to Toledo in a runoff vote last year.

Analysts said Solari, who was sacked as health minister in January, will play a leading role in bolstering Peru Possible ahead of regional and municipal elections in November, in which the government party was expected to fare badly.

Silva Ruete headed the Finance Ministry during an eight-month transitional government that took over in November 2000 after former President Alberto Fujimori's 10-year authoritarian regime collapsed in a corruption scandal.

He will manage the delicate task of keeping a lid on spending as the government's cash-raising privatization program appears to have stalled in the face of popular opposition.

Calls for Cabinet changes escalated after six days of rioting and violent protests in June against the privatization of two electric companies left two people dead and dozens injured southern Peru.

Toledo also named Gerardo Ayzanoa as the new education minister and Javier Reategui as transportation minister. Eduardo Iriarte was appointed to the post of minister of production, and Ana Maria Romero took over as women's minister.