The former Welsh Secretary, Stephen Crabb, has been appointed as to follow Iain Duncan Smith as the new Work and Pensions Secretary.
Downing Street announced the appointment on Saturday morning, just hours after the veteran Tory minister's dramatic resignation.
David Cameron said he was “puzzled and disappointed” after Mr Duncan Smith quit the Cabinet and launched an all-out attack on the “indefensible” budget on Friday evening.
In his parting shot, the Work and Pensions Secretary complained that cuts to disabled benefits in George Osborne's financial package were “politically driven” and suggested the Chancellor had abandoned the austerity principle of “all in this together”.
“I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled and the context in which they've been made are a compromise too far,” Mr Duncan Smith wrote in his resignation letter.
“While they are defensible in narrow terms, given the continuing deficit, they are not defensible in the way they were placed within a Budget that benefits higher earning taxpayers.”
Mr Duncan Smith, considered one of the more right-wing members of the cabinet, is opposing Mr Cameron and Mr Osborne's support for Britain to remain in the EU, joining a handful of other Cabinet ministers backing a Brexit.
But his letter to the Prime Minister claimed that the row over cuts to the Personal Independence Payment (PIP) had been the last straw.
His announcement came hours after the Treasury signalled a humiliating climbdown over the plans to change PIP assessment criteria, which were expected to slash around £1.3 billion a year off the cost.
Responding to Mr Duncan Smith, Mr Cameron recalled the pair designing the benefit together to “support the most vulnerable and to give disabled people more independence”.
"That is why we collectively agreed - you, No 10 and the Treasury - proposals which you and your department then announced a week ago,” he wrote in the letter.
"In the light of this, I am puzzled and disappointed that you have chosen to resign.”
Alun Cairns has been appointed as the new Secretary of State for Wales, while Guto Bebb has moved into his former position as a Welsh minister and whip.
Additional reporting by PA
