Prime Minister Ham Lini has appointed four new ministers after sacking several over the weekend, including his deputy Sato Kilman.
Mr Kilman, who also was Vanuatu's foreign minister and chair of the Pacific Islands Forum's Eminent Persons Group on Fiji, was the most senior casualty of the cabinet reshuffle.
Our Fiji correspondent Samisoni Pareti, who is in Port Vila this week, reports that four new ministers took their oath of office last night.
Prime Minister Lini was angered, Radio Vanuatu says, about the alleged involvement of three of Mr Kilman's party members in a fraud involving government cheques amounting to over a million dollars.
Mr Kilman is being replaced as deputy prime minister by Edward Natapei, himself a former prime minister of Vanuatu.
Mr Natapei is also minister for public utilities after the previous holder of the portfolio, Serge Vohor, also lost his job over the weekend.
Mr Vohor allegedly assaulted a ministry of finance official last Friday after complaining about delays in his pay.
Officials of the Pacific Islands Forum secretariat, which is convening two major regional meetings in Vila this week, say the latest cabinet reshuffle should not affect the meetings.