The scandal-hit politician has had the department, which had control over housing, environment and planning policy, taken away from him, but retains the title of deputy prime minister.
Former education secretary Ruth Kelly has taken on Prescott's local government brief, which is understood to cover housing issues.
It is well documented that Prescott is the biggest advocate within government of the Pathfinder initiative, which would see swathes of housing demolished in the north of England as a way of forcing up depressed house prices.
Observers have noted that any new minister to take charge of this responsibility would be tempted to drop the controversial policy.
The Pathfinder initiative has faced heavy opposition from the communities that it is supposed to benefit.
Many argue that the houses could easily be refurbished at a lower cost than that of demolition and new build.
It is, however, unlikely that the Sustainable Communities Plan, which includes proposals to build thousands of new homes in the South East, will be dropped.