Justine Greening has resigned from the government after refusing a job as work and pensions secretary in Theresa May's cabinet reshuffle, the BBC understands.
BBC political editor Laura Kuenssberg said the PM was "disappointed" the ex-education secretary had resigned.
She has been replaced by Damian Hinds, while Esther McVey has been promoted to be the new work and pensions secretary.
Brandon Lewis is Tory chairman, Matt Hancock is culture secretary and Karen Bradley is Northern Ireland secretary.
She replaces James Brokenshire, who resigned for health reasons.
Ms Greening's resignation comes less than a month after she launched the government's social mobility strategy.
In her resignation statement she said: "Social mobility matters to me and our country more than a ministerial career.
"I'll continue to work outside of government to do everything I can to create a country for the first time that has equality of opportunity for young people wherever they are growing up."
In Mrs May's reshuffle, Mr Lewis, the immigration minister, replaces Sir Patrick McLoughlin as Conservative Party chairman, with James Cleverly as his deputy.
Justice Secretary David Lidington has been moved to the Cabinet Office.
Mr Lidington, who will deputise for Mrs May at PMQs, is succeeded by David Gauke - who is switching from work and pensions, where his responsibilities included the roll-out of universal credit.
Mr Lewis, the Great Yarmouth MP, has been a minister since 2012 and is a qualified barrister and former local councillor.
In his role as chairman he will be tasked with broadening the Conservatives' appeal after they lost their Commons majority in June's general election.
He will be assisted by Mr Cleverly, the pro-Brexit backbench MP for Braintree, and a new line-up of vice chairs with responsibility for different areas has also been announced.
The replacement for Mr Brokenshire, who is awaiting surgery for a lung condition, will be at the heart of attempts to end the political deadlock at Stormont.
Home Secretary Amber Rudd, Chancellor Philip Hammond, Brexit Secretary David Davis and Foreign Secretary Boris Johnson are staying in their jobs.
Jeremy Hunt, who had been touted for a possible move, remains in his job, which has been renamed secretary of state for health and social care.
Also not moving is Communities Secretary Sajid Javid, but the word "housing" has been added to the title of his department.
Labour said Mrs May should focus on the pressures in the NHS rather than what it said was a "desperate PR exercise".
Grant Shapps, Conservative party chairman between 2012 and 2015, said the reshuffle was not "brilliantly executed" but praised plans for housing and health.
"There was some good stuff, strangely buried in a reshuffle that didn't quite go to plan," he told BBC Two's Newsnight.
He said the addition of housing to the title of the communities department would give "a lot more focus" to government plans to build more homes - adding that plans to bring health and social care together were "quite smart".
But Leader Jeremy Corbyn said: "The government's big plan for the new year is to dodge the real issues and reshuffle the pack in a pointless and lacklustre PR exercise.
"It's simply not good enough. You can't make up for nearly eight years of failure by changing the name of a department."
The reshuffle, which will continue into Tuesday, is being seen as an opportunity for Mrs May to promote more women, with female ministers only making up six of the 23 full members of her top team before it began.
She is also under pressure to preserve the balance between Brexit sceptics and enthusiasts, while showing the government has a purpose beyond leaving the EU, which critics say is monopolising ministers' time.
When prime ministers make several changes to their ministerial line-up at the same time it is known as a reshuffle. New ministers can be appointed and existing ones moved or fired.