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The Department for Education and Skills has been split up as part of a package of Whitehall changes.
In one of his first major decisions as prime minister, Gordon Brown created a new Department for Children, Schools and Families, to be headed by his key ally Ed Balls.
The ministry also takes over responsibility for the Youth Justice Board and 'respect' agenda, tackling childhood obesity and promoting youth sport.
The prime minister's spokesman said: "This new department is clearly focused on the needs of children beyond the traditional schooling, it has a focus on behavioural issues."
The rest of the ministry is being merged with parts of the old Department of Trade and Industry to become a Department of Innovation, Universities and Skills to be run by senior Labour MP John Denham.
It will also be responsible for science policy with a new Office of Chief Scientific Adviser to be created within the department.
In a bid to refocus the DTI on the needs of industry, a Department for Business, Enterprise and Regulatory Reform (DBERR) has also been created.
The better regulatory office will also be moved here from the Cabinet Office.
International trade policy will be shared between the DBERR and a beefed-up Department for International Development and trade promotion with the Foreign Office.
A new advisory Business Council for Britain of leading industry figures will also sit twice a year.
Brown had already announced a strengthened role for the Cabinet Office at the centre of government.
And in his very first act as prime minister he signalled an end to so-called "sofa government", with senior Number 10 roles taken by civil servants rather than political staff and special advisers banned from directing Whitehall officials.
Dods Parliamentary Communications Ltd