Mr Woodhouse, a list MP from Dunedin, remains Workplace Relations and Safety Minister and ACC Minister.
He becomes deputy leader of the House, working with Economic Development Minister Simon Bridges, who was promoted to Leader of the House to replace Gerry Brownlee, who becomes Foreign Minister.
Mr Woodhouse said he was not disappointed by the announcement.
If Health Minister Jonathan Coleman had been appointed Defence Minister, Mr Woodhouse thought he would have been a candidate for health.
However, Mr Brownlee's defence portfolio went to Mark Mitchell, who is ranked No20 and bottom of the Cabinet list.
Mr Woodhouse acknowledged health was an important issue for Dunedin, particularly because of the hospital rebuild.
He said he was ``very tuned in'' to the issue and was working closely with Dr Coleman on it. That would not change.
``With the political nuances of immigration likely in the next four or five months, it made sense for me to keep the portfolio.''
It was important to retain Workplace and Relations and Safety alongside immigration so he could steer through Parliament the equal pay legislation, Mr Woodhouse said.
Immigration was likely to be a large campaign issue and the minister took issue with Labour leader Andrew Little's assertion he could cut immigration numbers dramatically.
``The only way to do that is to stop overseas people coming in. We will be looking behind those numbers and asking him to explain how he will achieve them.''
