Ian Campbell will leave his post as secretary of the Veterans Affairs Department next month for surgery and will not return to work after his recovery.
Simon Lewis from Defence will act as secretary while Mr Campbell is on leave and will take over the position when Mr Campbell retires in July.
The changes were announced by Prime Minister Julia Gillard on Friday before she left for China.
Mr Campbell had previously advised he would not be seeking further appointment after his term as secretary expired in September this year.
''Mr Campbell will now be taking a period of leave from early May for surgery and subsequent recovery and has decided to retire as secretary from July so as to avoid any disruption in the leadership of the department,'' Ms Gillard said.
Mr Lewis is at present an associate secretary and chief operating officer in the Department of Defence.
''Prior to joining Defence, Mr Lewis had an extensive and lengthy public service career in the Department of Finance and Deregulation where he was responsible for asset management (including Comcover), government advertising and procurement policy,'' the Prime Minister said. Mr Lewis has tertiary qualifications in economics, public administration and computing studies and is a graduate of the Joint Services Staff College.
His appointment as secretary will be for five years.
Veterans Affairs Minister Warren Snowdon paid tribute to Mr Campbell and wished him a speedy recovery from surgery.
He said Mr Campbell had had a very impressive career of more than 40 years in the Australian Public Service, including as Australian Electoral Commissioner for three years before being promoted to his present position in September 2008.
''The effective and productive relationship that the department has with ex-service organisations is very much due to Mr Campbell's commitment to engage and involve the ex-service community,'' Mr Snowdon said.
''Since taking on the role of secretary, Mr Campbell has been instrumental in building on the close bonds that exist between Turkey and Australia regarding the Anzac Day services in Gallipoli each year.
''This has included preliminary work, in conjunction with our New Zealand colleagues, in the lead-up to Anzac Day 2015.''