Fresh from his failed bid to become prime minister, ‘reluctant challenger’ Peter Dutton has been reinstated to cabinet despite his key role in destabilising the government.

Former PM and one of the architects of the unrest Tony Abbott claimed on Monday that Mr Dutton was reluctant to challenge Malcolm Turnbull for the leadership of the Liberal Party.

Abbott said he was confident Australia was in “better shape” this week than before Scott Morrison took over as prime minister.

“He (Dutton) was a most reluctant challenger … just as I was,” Mr Abbott said, in reference to his deposing of Mr Turnbull as leader in 2009.

In a speech in Sydney on Monday Mr Abbott said Mr Morrison had strong character and expected him to install a “sharper difference” between the Liberal and Labor parties ahead of the next federal election.

Mr Dutton, who quit the frontbench to launch a strike on Malcolm Turnbull’s leadership last week, was sworn in again as home affairs minister at Government House on Monday.

But Labor is plotting its next steps in response to a possible constitutional cloud hanging over Peter Dutton.

Mr Dutton continues to face questions over his eligibility to sit in federal parliament, due to his personal financial interest in commonwealth-funded child care centres.

Shadow attorney-general Mark Dreyfus said it was “the very definition of poor judgment” for Mr Dutton to be returned as home affairs minister when it wasn’t clear whether he was legally allowed to remain.

On Friday, Solicitor-General Stephen Donaghue found there was “some risk” the High Court would find Mr Dutton has a conflict of interest over federal payments to the centres.

But Mr Donaghue found it was unlikely Mr Dutton would be disqualified by reason of payments made to his family trust.

“Labor is considering our options,” Mr Dreyfus said on Monday.

The solicitor-general’s advice on Mr Dutton’s eligibility is far from definitive. If Mr Dutton thinks all questions have been settled, he is kidding himself.”

Section 44 of the Constitution bans from parliament anyone who has “any direct or indirect pecuniary interest with the public service of the Commonwealth”.

Mr Dutton insists he is clear to stay in parliament and released various bits of legal advice he said supported that position.

Treasurer Josh Frydenberg was at Monday’s ceremony, with the new prime minister Scott Morrison touring western Queensland to get a first-hand picture of the drought.

“(Mr Dutton’s) performed extremely well in that important role and will continue to do so,” Mr Frydenberg told Sky News.

Mr Dutton was returned to his portfolio early so he can attend an intelligence and security meeting, while the rest of Mr Morrison’s 23-member cabinet and wider ministry will be sworn in on Tuesday.

The new ministry includes some of those behind the toppling of Mr Turnbull as the Liberal Party tries to heal deep divisions before the next election, due by May.

“There’s both new faces and the stability and continuity from the Turnbull government,” Mr Frydenberg said.

It includes six women – up from five under Mr Turnbull – but three-quarters of his full ministry is male.

New Energy Minister Angus Taylor will work on a revised plan to get power prices down and maintain reliable electricity.

“He’ll bring a fresh set of eyes to a fresh set of challenges,” Mr Frydenberg said.

WA’s Melissa Price, who used to work for a mining company, comes into the cabinet to oversee environment policy.

The Greens are livid with the “anti-environment” cabinet appointments, describing Ms Price as a “climate sceptic, pro-mining” environment minister.

Victorian MP Alan Tudge will take on population and infrastructure, which Mr Morrison said was all about “congestion busting” in the capital cities.

With Julie Bishop going to the backbench and expected to retire from parliament at the next election, former defence minister Marise Payne takes on foreign affairs.

Despite having swung behind Mr Dutton’s tilt at the leadership, Mathias Cormann has been returned as finance minister and Senate leader.

Dutton backer Michael Sukkar has been dumped as assistant treasurer.

“I’m sure Michael will rise back to the executive and to the ministry in due course. He’ll be around for a long time to come,” Mr Frydenberg said.

Ex-Nationals leader Barnaby Joyce was made special envoy for drought assistance and drought recovery, while former prime minister Tony Abbott has been offered a similar role within indigenous affairs.

Mr Frydenberg said he was hopeful Mr Abbott could play a role in an area he was passionate about.

-with AAP