John Reid last night became Britain's beefed-up homeland security czar after Tony Blair gave the go-ahead for the splitting up of the Home Office - enabling it to focus more on the "people's priorities" of fighting terrorism, organised crime and illegal immigration.

The Home Secretary told MPs the move was aimed at creating a "step change in our approach to managing the terrorist threat to the UK and to winning the central battle which is the struggle for values and ideas".

In a written statement, the Prime Minister made clear he wanted to strengthen the Secretary of State's role in fighting crime and terrorism. "The continuing and growing threat from terrorism means that the government must develop and improve its counter-terrorism and security capabilities and its governance," he said.

Under the changes, a slimmed-down Home Office will retain responsibility for policing, antisocial behaviour, drugs, crime reduction, immigration and asylum as well as domestic security and counter-terrorism.

A new Ministry of Justice, from May 9, will handle the overall criminal and civil justice system, including courts, prisons and probation as well as constitutional reform. The current Department for Constitutional Affairs, which includes the Scotland Office, will be subsumed into the new ministry.

Among the changes, the Home Office will absorb counter-terrorism strategy from the Cabinet Office with the creation of a new strategic nerve centre, employing up to 300 people to co-ordinate a cross-departmental response to fighting the terrorist threat. A new ministerial committee on security and terrorism, to be chaired by Mr Blair, will also be established.

While some politicians and organisations, such as Napo, the probation union, welcomed the changes, particularly the creation of a Justice Ministry, others were more critical. Tory leader David Cameron branded it a "mistake" and said his party would try to stop it. Charles Clarke, the former Home Secretary, called the split an "irresponsible decision".

The changes come after a torrid year for the Home Office, hit by a series of controversies including the foreign deportation scandal. Last year, Mr Reid famously declared the country's immigration service was "not fit for purpose".

In the Commons, he told MPs the departmental changes were needed to meet the changing nature of the threats Britain faced.

"Along with the fight against crime and antisocial behaviour, the Home Office will be refocused towards the challenges of today's world and focus on the priorities of today's people."

He stressed Foreign Secretary Margaret Beckett would retain control of MI6 and Communities Secretary Ruth Kelly would keep her responsibilities for community cohesion.

Mr Reid also made clear he would "of course, consult with Cathy Jamieson on this to make sure we have a seamless and integrated response in all these areas as is possible given the autonomy, in many areas, of the Scottish Executive".

Shadow Home Secretary David Davis, however, was unimpressed by the changes. He said: "Breaking it up will solve none of the Home Office's problems. It will just create a whole new raft of problems.

"Because of the way it has been done, the creation of a Department of Justice and a Department of Security will leave public security undermined and a justice system overwhelmed."

He added officials would be "distracted" by the massive reorganisation, rather than concentrating on current issues such as combating terror, overflowing prisons and immigration.

Last night, the Scottish National Party focused on the fate of the Scotland Office, which will come under the umbrella of the new Justice Ministry.

Pete Wishart, the SNP's constitutional affairs spokesman, pointed out how the new department would deal primarily with criminal justice issues in England.

He said: "It looks like the Scotland Office has become a sub-branch of a sub- branch. What was once a great department of state appears to have been forgotten in a forced shake-up of the Home Office."