Sajid Javid has resigned as chancellor after refusing to sack his aides in a stunning row with the prime minister.
Former chief secretary to the Treasury Rishi Sunak has replaced Mr Javid, telling journalists as he entered the Treasury that he was "delighted to be appointed" and had "a lot to get on with".
On a day when there were expectations of only a moderate shake-up of Boris Johnson's government - little more than two months after the Tories' general election success - Mr Javid sent shockwaves through Westminster by quitting his role.
His departure comes less than four weeks before this year's budget, meaning Mr Javid will leave the Treasury without ever having delivered the set-piece fiscal announcement.
Sky News understands Mr Javid was offered the chance to keep his role but resigned following a dispute with Downing Street over his close aides.
The prime minister demanded the chancellor sack all of his special advisers following turbulence between Number 10 and the Treasury in recent weeks.
The chancellor refused and as a result both sides decided to part company.
Sky News political editor Beth Rigby revealed Mr Javid was told he was the "best person" for the job, but the price was getting rid of his advisers as well as having a new advisory unit between Number 10 and Number 11.
Sky News economic editor Ed Conway said: "I can't think of another example of a chancellor who's been effectively removed from office in recent years, let alone just before the budget.
"The budget is a really big moment for the government, which is changing its economic strategy.
"A lot of people have been looking towards the Treasury, looking towards Sajid Javid trying to get a sense of what this new government's economic strategy is going to be in the post-Brexit era.
"They are shocked."
Labour's shadow chancellor John McDonnell claimed the events amounted to a power-grab by Mr Johnson's chief adviser Dominic Cummings.
He said: "This must be a historical record with the government in crisis after just over two months in power.
"Dominic Cummings has clearly won the battle to take absolute control of the Treasury and install his stooge as chancellor."
In a wider shake-up of his government, Mr Johnson had earlier sacked eight ministers before beginning the process of announcing their replacements.
Rishi Sunak - appointed chancellor
The 39-year-old is promoted from chief secretary to the Treasury to replace Mr Javid as chancellor.
It marks a meteoric rise for the former hedge fund worker and Goldman Sachs analyst, who was only elected to parliament in 2015.
The Brexiteer was an early backer of Mr Johnson's Tory leadership campaign last year.
Alok Sharma - appointed business secretary
The Reading West MP moves from his cabinet role as international development secretary to become the new business secretary.
He has also been appointed as the minister responsible for the COP 26 climate summit in Glasgow this November.
Anne-Marie Trevelyan - appointed international development secretary
The Berwick upon Tweed MP has been promoted to the cabinet from her former role as Armed Forces minister.
She was a keen supporter of Mr Johnson during last year's Conservative leadership contest and sat on the board of the Vote Leave campaign during the EU referendum.
Julian Smith - sacked as Northern Ireland secretary
Just weeks after helping to restore power-sharing government in Northern Ireland, Mr Smith has lost his job.
Despite the praise he received for his role in returning devolved government at Stormont, the Skipton and Ripon MP had previously been earmarked as disloyal to Mr Johnson over Brexit.
He broke ranks with the prime minister last year by warning a no-deal Brexit would be "very, very bad for Northern Ireland".
Andrea Leadsom - sacked as business secretary
The leading Brexiteer has lost the job she held since Mr Johnson became prime minister in July.
Prior to joining his cabinet, Ms Leadsom ran against Mr Johnson in last year's Conservative leadership contest.
Theresa Villiers - sacked as environment secretary
Another Brexiteer to lose her job now that the UK has left the EU.
Her replacement will have to help oversee negotiations on access to UK fishing waters as the government holds trade talks with the EU over the next few months.
Geoffrey Cox - sacked as attorney general
The former barrister - yet another Brexiteer to leave the government - lost his job just before he was due to address the House of Commons on Thursday morning.
Solicitor general Michael Ellis instead took questions from MPs.
Esther McVey - sacked as housing minister
The Conservatives will now have gone through ten housing ministers in less than ten years after Ms McVey's sacking.
The Brexiteer ran against Mr Johnson in last year's Conservative leadership contest, but was knocked out in the first round.
Chris Skidmore - sacked as universities minister
The Kingswood MP has lost the job he held in two spells.
He was first appointed universities minister by ex-prime minister Theresa May in December 2018 and held the role until Mr Johnson entered Downing Street last July.
Mr Skidmore returned to the job when his successor - Mr Johnson's brother Jo Johnson - quit the government after just six weeks in post.
Nusrat Ghani - sacked as transport minister
The Wealden MP has been removed from the role she had held since January 2018, when she became the first Muslim woman to speak from the Commons despatch box.
She supported Jeremy Hunt against Mr Johnson in last year's Conservative leadership contest.
George Freeman - sacked as transport minister
Mr Johnson's clear-out of the Department for Transport also included the sacking of Mr Freeman, who was Mrs May's former policy chief.
The prime minister has made transport improvement and infrastructure projects one of the priorities of his government.