British Prime Minister Margaret Thatcher reshuffled her Cabinet Friday in the wake of Sir Geoffrey Howe's resignation as her deputy after a row over policy toward Europe.

She shifted three key portfolios, suggesting that she was trying to do more than just control the damage done by the departure of the last member of her original 1979 Cabinet.She did not appoint a new deputy prime minister, a title that was widely seen as a sop to Howe when he was demoted from the foreign secretary's post 15 months ago.

She selected Education Secretary John MacGregor to replace Howe as leader of the House of Commons. Kenneth Clarke moves from health to education. William Waldegrave, regarded widely as one of the brightest young members of the government, leaves his job as junior minister at the foreign office to take on the full Cabinet responsibility of health.

The three moves touch the Conservative Party's prospects of re-election: the parliamentary leader's role is crucial to presenting the image of a government in firm political control; education and health are public services undergoing radical reforms in the face of increasing public criticism.

Neither Thatcher nor Howe elaborated Friday on their differences over Europe that led to her deputy's shock departure Thursday.

But most political observers here believed Thatcher would now have to moderate her opposition to European unity or face a possible leadership challenge.

Opposition leaders were quick to seize on the reshuffle to suggest Thatcher was losing her grip on power.