Sajid Javid has dramatically quit as Chancellor in a row with Boris Johnson over his closest aides.
The Prime Minister had been expected to keep Mr Javid in post and news of his resignation shocked Westminster.
Allies of the former chancellor said the Prime Minister had ordered him to fire all of his senior aides if he wanted to remain at the Treasury – something Mr Javid refused to do.
His former deputy at the Treasury, Chief Secretary Rishi Sunak, will take the job having reportedly agreed to a joint Number 10-Number 11 team of advisers.
The bombshell came after long-standing rumours of tensions between the ex-chancellor and Mr Johnson’s closest aide Dominic Cummings.
In August he had fired Mr Javid’s aide Sonia Khan and it appears Number 10 wanted to go further in keeping a closer eye on the chancellor.
Mr Javid said that “no self-respecting minister” could accept the condition being imposed.
“He has turned down the job of Chancellor of the Exchequer,” a source close to Mr Javid said.
“The Prime Minister said he had to fire all his special advisers and replace them with Number 10 special advisers to make it one team.
“The Chancellor said no self-respecting minister would accept those terms.”
Mr Javid had walked smiling into Number 10 in a sign that he expected to remain in place ahead of the March 11 Budget.
His departure came after Julian Smith was unceremoniously dumped as Northern Ireland Secretary, Andrea Leadsom was sacked as Business Secretary and Theresa Villiers lost her job as Environment Secretary.
Other senior ministers axed by Boris Johnson included Geoffrey Cox from his post as Attorney General and Esther McVey as housing minister.
Mr Smith’s departure came just weeks after brokering the deal which restored the powersharing administration in Stormont.
He said it had been “the biggest privilege” to serve the people of Northern Ireland and he was “extremely grateful” to have been given the chance to serve “this amazing part of our country”.
Irish Taoiseach Leo Varadkar said Mr Smith was “one of Britain’s finest politicians of our time”.
Speculation about Mr Smith’s position centred on the terms of the Stormont deal, amid Tory concerns it could pave the way for prosecutions of British soldiers.
But allies of the axed minister said it was “absolute crap” to suggest that Mr Johnson and Number 10 had not been kept informed of the process and details of the deal.
Although female ministers were axed in the reshuffle, Downing Street indicated there would not be a reduction in the number of women around the Cabinet table.
Culture Secretary Baroness Morgan had already said she intends to leave her ministerial role, while Mrs Leadsom, Ms Villiers and Ms McVey were all sacked.
Mrs Leadsom said it had been a “real privilege” to spend six years in Government, adding: “I will continue from the back benches to work to ensure everyone is treated with dignity and respect.”
Ms Villiers said: “What the Prime Minister giveth, the Prime Minister taketh away: just over six months ago, I was delighted to be invited by the Prime Minister to return to government after three years on the backbenches.
“This morning he told me that I need to make way for someone new.”
Former Tory leadership contender Ms McVey said she was “very sorry to be relieved of my duties”.
Mr Cox made clear he had been sacked, rather than choosing to leave his role, saying: “I am now leaving the Government at the PM’s request.”
Female MPs in line for promotion during the reshuffle process include defence minister Anne-Marie Trevelyan, former Brexit minister Suella Braverman and Gillian Keegan.
Alok Sharma is expected to be promoted from his current Cabinet post at International Development, while Paymaster General Oliver Dowden – who attends Cabinet – is also in line for a bigger job.
A Number 10 source said: “The Prime Minister wants this reshuffle to set the foundations for government now and in the future.
“He wants to promote a generation of talent that will be promoted further in the coming years.”
The most junior ministerial rank – parliamentary under-secretary of state level – is likely to have a 50-50 gender split after the reshuffle.
By the summer, Mr Johnson also aims to ensure that at least 60% of ministerial aides – the parliamentary private secretaries – will be women, up from 18% at present.
In a sign that male ministers would pay the price, Chris Skidmore indicated he had left his post as universities minister to have “more time to spend” with his child.
George Freeman said he was “on my bike” after losing his transport job.
But at least one female minister also lost out, with Nus Ghani joining Mr Freeman in departing the Department for Transport.
Other factors at play in this reshuffle include filling the vacant role in charge of the Cop26 UN climate summit following the sacking of Claire O’Neill and deciding whether Steve Barclay will return to Government after the Brexit department was scrapped following the January 31 departure from the European Union.
Home Secretary Priti Patel, Foreign Secretary Dominic Raab and Chancellor of the Duchy of Lancaster Michael Gove were all confirmed in their existing roles.
Downing Street has previously confirmed that Grant Shapps will stay on as Transport Secretary.