Tesco UK boss Wilson steps back due to illness

* UK and Ireland (Other OTC: IRLD - news) boss Charles Wilson diagnosed with cancer

* Wilson (Oslo: WILS.OL - news) stays with Tesco (Frankfurt: 852647 - news) in narrower role

* Jason Tarry is new CEO of the UK and Ireland business

* Wilson had been seen as potential successor to CEO Dave Lewis (Adds share price, analyst comment)

LONDON, July 10 (Reuters) - Tesco said its recently appointed UK and Ireland boss Charles Wilson would step down to a less onerous role after being diagnosed with throat cancer three months ago.

Wilson, the former CEO of wholesaler Booker which was bought by Tesco in March, had been seen as a potential heir to Tesco (Swiss: TSCO.SW - news) Chief Executive Dave Lewis. He had been appointed to run Tesco's largest division only five months ago.

Tesco veteran Jason Tarry now becomes CEO of the UK and Republic of Ireland business, reporting to Lewis. His previous role as group chief product officer was handed to Andrew Yaxley, the boss of the Ireland unit.

Shares (Berlin: DI6.BE - news) in Tesco traded down 1.4 percent to 256.4 pence as investors responded to what independent retail analyst Nick Bubb called "shock news".

"The highly regarded Charles Wilson is the brains behind Booker and was widely expected to take over from CEO Dave Lewis in due course," he said.

Wilson, 52, has been responding well to radiotherapy and the signs were that the treatment has been successful, Tesco said in its statement on Tuesday. He was diagnosed with cancer after an operation to take out his tonsils.

To help ease his workload, Wilson will focus on leading the Booker business and delivering the cost synergies and growth plans from the combination with Tesco.

Wilson will continue to report to Lewis.

"Dave and I have agreed these changes to my leadership responsibilities in the interest of my long-term recovery from throat cancer," Wilson said in a statement. "I have had the privilege of working closely with Jason and know he will do a brilliant job."

The reshuffle of Tesco's top management team comes at a time of change in Britain's supermarket sector as Tesco faces losing its long-held number one spot in the UK to second-ranked Sainsbury (Amsterdam: SJ6.AS - news) 's which agreed to buy Wal-Mart owned Asda, the number three player in April.

Tesco said the management changes would be effective from July 16. (Reporting by Sarah Young Editing by Kate Holton/Keith Weir)