President Vladimir Putin approved Mutko's appointment to a new post of deputy prime minister in charge of sport, tourism and youth politics, adding that Mutko's deputy, former Olympic fencer Pavel Kolobkov, would take over as sports minister.
Mutko's move to the new position is the latest in a series of high-profile staffing changes in the Russian government and comes on the heels of doping scandals that saw the country's track and field team sidelined from the Rio Olympics in August.
WADA founder Dick Pound, who headed an independent commission that probed doping in Russia, said last year it was "not possible" for Mutko to have been unaware of the vast rot in the system and "if he was aware of it, then he was complicit in it."
A programme by German public broadcaster ARD which aired in June suggested Mutko had been involved in covering up positive doping tests by a footballer playing for FC Krasnodar in 2014, a charge the minister dismissed as "a deliberate attack" on Russia.
Mutko -- who also heads Russia's football association and was president of Zenit Saint Petersburg from 1997 to 2003 -- has been repeatedly implicated in scandals, from FIFA to the Olympics, but has always managed to face down controversies.
The Kremlin vowed to suspend officials directly implicated in WADA's McLaren report -- which in July accused Moscow of covering up doping violations and called for Russia to be banned from Rio -- but insisted there was no hard proof against Mutko.
"This is exactly the sort of person who should be appointed deputy prime minister," he wrote, tongue firmly in cheek.
Russia narrowly escaped a blanket ban from the Rio Olympics when the International Olympic Committee (IOC) in July left it up to international sports federations to determine which Russians were eligible to compete while granting itself a final say.
But its athletes were slapped with a blanket ban from the Paralympic Games over allegations of state-run doping in the McLaren report.
Kolobkov, 47, was a prolific Olympic fencer, winning six medals including gold at the 2000 Sydney Games in individual epee.
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