(CNN) -- Saudi Arabia's King Abdullah on Friday appointed Prince Nayef bin Abdulaziz to be the nation's second deputy prime minister, making him second in line to the kingdom's throne, the state-run Saudi Press Agency said.
The royal decree "was issued with immediate effect," SPA said.
The appointment of Abdullah's powerful half-brother to the post means that Nayef is now the country's crown prince in waiting and second in succession to be king.
Nayef, who currently serves as the interior minister, is considered more conservative than Abdullah, viewed by some as a liberal reformer.
Nayef's appointment appears to reverse a trend that began in February, when Abdullah announced a major cabinet reshuffling in which many hard-line conservatives were dismissed and replaced with younger, more moderate members.
Those replaced included the minister of justice and minister of information.
The appointments, which represented the largest shakeup since Abdullah took power in 2005, were welcomed in Saudi Arabia as progressive moves by the king.
The current crown prince and deputy prime minister, Prince Sultan bin Abdulaziz Al Saud, left Saudi Arabia a few months ago to undergo medical tests and surgery in New York. His health has been the subject of intense speculation in Saudi Arabia, but the Saudi government maintains his health has improved.
Last week, media reports quoted Nayef downplaying the rumors about Sultan's health.
"I would like to assure you that the crown prince's health is very good," he told reporters, according to the Arab News. "God willing, after the medical vacation he will return to the kingdom in full health."
Thursday's announcement answers a long-standing question regarding the country's plan for royal succession and represents the latest in a line of moves by the Saudi king that could have a long-lasting impact on the direction of the kingdom.
CNN's Mohammed Jamjoom and Nic Robertson contributed to this report.