Burma's Prime Minister Khin Nyunt has been ousted by a more conservative member of the ruling military junta, Soe Win.
Khin Nyunt is reportedly under house arrest
The often secretive government said Khin Nyunt had been "permitted to retire for health reasons".
But there is little doubt that his departure relates to a power struggle which has been going on for months.
As well as being prime minister and third in Burma's political hierarchy, Khin Nyunt was also the chief of military intelligence.
This position frequently brought him into disagreement with Burma's paramount leader Than Shwe, who controls the entire army.
"There has been a conflict between the army and the intelligence for some time," said Aung Zaw, the editor of Irrawaddy, a publication run by Burmese journalists in exile.
"They have often been at loggerheads," he told BBC News.
According to Dr Aung Kin, a Burmese historian based in London, Khin Nyunt's fall from power could be related to Than Shwe's desire to secure his own future.
Now 71, Than Shwe is past the usual retirement age for Burmese generals, but has been worried about his safety if he left office, Mr Kin said.
"Military uniform is very important in Burma," Mr Kin said, adding that without it, Than Shwe would lose both his power and his security.
Now it appears he has tried to solve that problem by purging those elements within military intelligence which could threaten him.
Khin Nyunt has reportedly been arrested, as have scores of other military intelligence officials.
Mr Kin said that the military intelligence service often acted as a broker between the ruling junta and supporters of the opposition National League for Democracy (NLD) - whose leader Aung San Suu Kyi remains under house arrest.
"It's difficult to know for sure what's happening internally," said Mr Kin, "but Than Shwe might want to create a new military intelligence service to suit himself" - with little to do with any opposition or outside influences.
In a country where the military controls everything, including the economy, business interests could also have been the motivation for Khin Nyunt's rumoured removal.
Several companies run by the military intelligence have been shut down in recent days, and Aung Zaw said the changes in Burma could well be due to "a conflict over how much territory and area [the two sides] can control in terms of business and armed forces."
Whatever the reasons behind it, analysts said Khin Nyunt's departure could be a further setback for efforts - both by opposition and international groups - to free Aung San Suu Kyi and put Burma on the road to democracy.
Aung San Suu Kyi's detention has caused international outrage
Than Shwe is seen as more hard-line than Khin Nyunt, who at least was prepared to discuss the release from house arrest of Aung San Suu Kyi, and also outlined a seven-point "roadmap" for change last August.
"Than Shwe doesn't care about international politics, he's only bothered about Burma's immediate neighbours," said Mr Kin.
"He's one of the most powerful and least educated people in Burma."
But others point out that while Khin Nyunt had a better grasp of international affairs than Than Shwe, he could hardly be called a liberal.
"He seemed more moderate in some ways, and other countries in the region certainly thought he could be the solution [to making Burma more democratic] but he obviously wasn't," said Nyo Ohn Myint, a senior member of the NLD in exile in Thailand.
He said that although Khin Nyunt had been prime minister for over a year, there had been no moves towards development.
Nyo Ohn Myint also said he was worried about the safety of the NLD leader.
"We are concerned for Daw Aung San Suu Kyi," he said. ""Khin Nyunt was the head of intelligence, and she is under their watch. Who is going to look out for her security?"
Mr Kin was concerned that Khin Nyunt's fall could signal
renewed fighting between Burma's ethnic groups and the government.
The government - led by Khin Nyunt - signed ceasefire agreements with several
rebel groups in the 1990s, but is still in negotiations with the largest, the Karen National Union.
"I'm not sure these groups will trust Than Shwe," said Mr Kin.
It remains to be seen what effect Khin Nyunt's removal from office will have on Burma in the long term.
Initial indications are not positive, but then as Dr Kin puts it: "At least it might wake people up to what is happening inside the country."
With so little improvement in the past few years, there is a feeling that any change in the status quo would be welcome.
"We have to look for something positive," said Aung Zaw.