Both the opposition and stakeholders from a range of sectors have slammed the shake-up which has created a string of new portfolios while also splitting responsibility for education among three ministers.
The opposition on Monday called on Ms Gillard to reinstate the education portfolio while questioning the appointment of former prime minister Kevin Rudd to foreign affairs and Penny Wong to finance.
Opposition finance spokesman Andrew Robb said the appointment of Mr Rudd as foreign minister was "reckless", adding that Ms Gillard's authority had been seriously damaged by the move.
"Kevin Rudd will represent Kevin Rudd and he'll take absolutely no notice of his new boss Julia Gillard. Her authority has been substantially diminished by that appointment," Mr Robb said.
"No one will have any authority over him in what is a crucial portfolio. It's an unstable situation for the country."
Mr Rudd will undertake his first mission as foreign minister when he visits Washington and New York for a week from Friday.
Mr Robb also attacked the promotion of Senator Wong to finance, saying her only exposure to business had been a failed attempt to impose a "massive tax", referring to the Carbon Pollution Reduction Scheme which Labour shelved earlier this year.
A spokesman for the prime minister said Mr Robb was in no position to criticise Senator Wong.
"Mr Robb demonstrated his economic ability when he miscalculated the opposition costings by between $A7 and $A11 billion during the election campaign," he said.
"Penny Wong will make a fantastic finance minister for the Gillard government."
The reshuffle has also seen education split three ways, with former environment minister Peter Garrett responsible for school education and early childhood education.
Kim Carr will retain research in his role as minister for innovation, while former immigration minister Chris Evans will be responsible for all other education-related policy, including Labour's school buildings programme.
Opposition education spokesman Christopher Pyne said dividing the portfolio was a major mistake and called for the position of education minister to be reinstated.
Labour may have deliberately split the portfolio into three in a bid to avoid scrutiny, he said.
"This makes it harder for the government to be held to account if you don't know who to go to complain."
Mr Pyne also said that having Mr Garrett, the minister who rolled out the bungled home insulation scheme, in charge of educating children was a "frightening" result of the reshuffle.
The prime minister's office defended the changes, saying both schools and higher education would be well represented and there would be no changes to the appointments.
"Education has been separated into two new portfolios - Skills and Schools," a spokeswoman for the prime minister said told News Limited.
"Together they cover the full gamut of education from our earliest kids in pre-school through to tertiary education and training."
But the education sector has questioned the changes with Michael Gallagher, the executive director of the Group of Eight - a collection of Australia's elite universities - saying they were disappointed.
"I mean, on the one hand she dismisses it as no real change, but it's a deliberate change to the title," he told ABC Radio.
"We're pretty disappointed," he said.
