Officials give up uniforms in apparent move to stand as civilians in forthcoming election.
“The senior general and vice-senior general remain at their position,” the official told the AFP news agency.
Thura Shwe Mann, the third most powerful member of the military, is also said to be stepping down.
The official said those who had retired from the military will join the army-backed Union Solidarity and Development Party (USDP) and “will take part in the election”.
Profile: Aung San Suu Kyi
Thein Sein, the country’s prime minister, and other ministers stepped down from the military in April to contest the election as the USDP party.
Thura Shwe Mann, the army’s number three leader, is likely to stand as a candidate in one of the constituencies in the administrative capital of Naypyidaw.
However, the reshuffle was not officially announced by local media, and state television was silent on the subject.
Conflicting reports have also emerged, such as a piece on the Irrawaddy website, run by an exile group, that Than Shwe – who has ruled the impoverished country with an iron fist since 1992 – retired his army post but would remain head of state.
The conflicting reports come as the country prepares for its first elections since opposition leader Aung San Suu Kyi’s National League for Democracy (NLD) was denied office by the government after winning a landslide victory in 1990.
Critics say the upcoming vote, which will guarantee a quarter of the legislature for the army, is a sham aimed at putting a civilian mask on the military.
Suu Kyi, a Nobel Peace laureate, has been in detention for much of the last 20 years and is barred from standing in the election because she is a serving prisoner.
The NLD is boycotting the upcoming poll, saying the rules are unfair. As a result, it was forcibly disbanded by the ruling generals.
A new party – the National Democracy Force (NDF) – was formed by former NLD members who decided to participate in the vote although it does not have the support of Suu Kyi, who favoured a boycott.
So far around 40 political parties have been given permission to stand in the polls, but some have expressed concerns, including over intimidation of their members.
Myanmar has been the focus of international concern in recent weeks, with Western nations dismissing the planned election as not free and fair.