OTTAWA — Prime Minister Stephen Harper will shunt aside embattled Environment Minister Rona Ambrose early next month in favour of one of his top lieutenants, sources tell The Canadian Press.

Jim Prentice, Indian affairs minister and head of cabinet's powerful operations committee, is expected to take on the pivotal environment portfolio.

He is to be replaced at Indian Affairs by Peter Van Loan, now heading up the Intergovernmental Affairs Department, say government and Conservative party sources.

Ambrose, who was skewered by critics as she struggled to sell a clean-air plan that even Tory insiders concede did not meet heightened expectations, would take Van Loan's place.

The three-way switch has emerged as Harper's cleanest option to start 2007 with a fresh focus on the environment and an eye on the next election. No one knows how soon Harper's minority government will fall -- by his own hand or under pressure from opposition parties.

But one thing became clear when Stephane Dion took the Liberal party helm -- green issues will be front and centre. Canadians are reporting increased alarm about global warming as the environment competes with health care as a top public concern.

It didn't help Ambrose that she had to juggle conflicting messages from a micro-managing Prime Minister's Office, says a senior government source who spoke on condition of anonymity.

"The impression I got was that she didn't do her homework. But I have to offset that by saying it doesn't matter if you've done your homework if someone switches the books first thing the next morning.

"At the last minute, they gave her new stuff or didn't give her information. It's not entirely her fault by any means.''

A low point came last week when Ambrose was corrected on a point of fact by her own assistant deputy minister as she testified before the Commons environment committee.

Any new minister will have to build bridges with a bureaucracy that worked for years under the assumptions of the Kyoto Protocol, said the government source. The accord was vigorously opposed by the Conservatives who shunned it once in power.

Ambrose is bright and worked hard to understand her files, said another Conservative insider who did not want to be named.

In the end, her apparent demise can be blamed on a scattered government approach on an evolving political issue that was not given its due.

Former Conservative prime minister Brian Mulroney stated the obvious when he stressed the importance of the environment in a recent interview with CBC Radio. His comments were seen not so much as criticism, but as a rallying cry to protect a vulnerable Tory flank from Liberal attacks, sources say.

As for Harper, he has coyly deflected opportunities to quell rumours that a cabinet shuffle is imminent.

"I've got a cabinet that's working really well together,'' he said Tuesday in an interview with The Canadian Press.

"We're constantly evaluating how we can do better. If at any time in the future I make any changes, you'll only know when I make them.''

In Edmonton for an unrelated announcement, Prentice said he wouldn't respond to rumours.

"I'm the minister of Indian Affairs and Northern Development and the Alberta regional minister ... and I'm quite happy doing that,'' Prentice said.

"We have a minister of environment and I look forward to working with her.''

Prentice said he's looking forward to continuing with work in his ministry after the Christmas break. 

Harper's most vocal critics say changes at the top won't be enough.

"What they need to do is rethink their approach to protecting the planet,'' said John Bennett of the Climate Action Network.

"I don't think, given this government's policy situation, that moving Prentice or anyone else to the environment portfolio is going to make any difference.''

The Calgary minister's competing obligations to power brokers in the Alberta oilpatch would also be a challenge, Bennett said.

"The Conservative party is too closely connected to the oil industry to be making policy that is going to significantly impact the operations of oil companies.

"That's the challenge we all have. Even the Liberals were unwilling to stand up to the power and money of the oil industry.''