Video report by ITV News Political Editor Robert Peston
Justine Greening has quit the Government after turning down the chance to take over at the Department of Work and Pensions.
The Education Secretary became the only big name departure during Theresa May's Cabinet reshuffle on Monday.
The Prime Minister was said to have been left "disappointed" by the decision, according to ITV News Political Editor Robert Peston.
Mrs May's shake-up was sparked by former First Secretary of State Damian Green's resignation following allegations of pornography being found on a Commons computer.
David Lidington replaced Mr Green, taking his other title as Cabinet Office Minister, while Brandon Lewis was installed to take over from Sir Patrick McLoughlin as Conservative Party chairman.
Boris Johnson, Philip Hammond, David Davis and Amber Rudd all kept their jobs.
And Jeremy Hunt and Sajid Javid had additional roles added to their titles, with the Health Secretary taking on responsibility for social care and the Communities and Local Government minister having housing added to his remit.
Ms Greening's decision to quit came at the end of a long day of Cabinet meetings for the Prime Minister.
She announced her departure shortly before 8pm, with the DwP leadership eventually going to Esther McVey.
Damian Hinds became the new Education Secretary.
Mrs May's reshuffled also signalled a wider shake-up of Conservative headquarters by promoting a number of ethnic minority, female and younger MPs.
It comes after former cabinet minister Sir Eric Pickles recommended changes to attract younger voters.
Health Secretary Jeremy Hunt, who had been mooted for a move to business, kept his role after "persuading" Mrs May not to transfer him, according to ITV News Political Editor Robert Peston.
Mr Hunt also convinced the Prime Minister that social care should come under his umbrella remit.
Earlier on Monday, Northern Ireland Secretary James Brokenshire resigned from the Cabinet due to a lung condition requiring surgery.
Mr Brokenshire said the decision had been made "with a great deal of regret" but that he hoped to return to government.
"At this really important time in Northern Ireland, the restoration of devolved government, wanting to see that renewed, getting back into a talks process, Brexit negotiations, and also dealing with the issues of the past, that requires focus, energy and intent, and with my surgery coming, I'm not going to be in a position to be able to give that sort of effort," Mr Brokenshire said.
The 50-year-old was made Northern Ireland Secretary in July 2016 during which he had to deal with the collapse of the Stormont Government, as well as overseeing failed power-sharing negotiations over the last year.
Shortly after his departure it was announced Karen Bradley would replace him, moving from the Department for Digital, Culture, Media and Sport.
Northern Ireland remains without an Assembly.
Prior to Mr Lewis' confirmation as party chair, the Conservatives deleted a tweet from their official account congratulating current Transport Secretary Chris Grayling on being appointed to the position.
A source close to Mr Grayling added that he had not been seen by the Prime Minister when the tweet mistakenly went out.
As well as reshuffling her Cabinet, it is thought Mrs May could appoint a "minister for no deal" specifically to prepare for the eventuality that the UK leaves the EU without an agreement.
Mr Hunt had been seen as a favourite for the role but Mrs May found it difficult to move him in the midst of an NHS winter crisis that has seen tens of thousands of operations cancelled.
Speaking on Sunday, Mrs May defended the cancellation of non-urgent operations, saying it was "part of the plan" to deal with winter pressures, adding that the NHS is "better prepared" this winter "than it has been before".
But Labour's shadow health secretary Jon Ashworth warned it would be seen as a "betrayal" of the thousands of patients left in the back of ambulances as they awaited admission to hospital if Mr Hunt was promoted.
Mr Grayling - a Brexiteer and backer of Mrs May's successful bid for the Conservative Party leadership - is also thought to be in the frame for the role.
Speaking outside his home on Monday morning, Mr Grayling said Mrs May had his full backing and that 2017 "had been a difficult year" for the Prime Minister, but 2018 would "be better".
The Daily Telegraph reported she will appoint a "minister for no deal" specifically to prepare for the eventuality that the UK leaves the EU without an agreement, with the post likely to go to Steve Baker - a prominent Leave campaigner who is already a Brexit minister.
The Prime Minister is also believed to want more women and MPs from ethnic minorities in her team with Suella Fernandes, the leader of the backbench Eurosceptics, Seema Kennedy and Rishi Sunak among those who could enter the Government for the first time.
Overall the reshuffle will be more extensive than that carried out by Mrs May following her humiliation in last year's general election when she felt able to make only limited changes to the Cabinet.
Cabinet reshuffle: Which jobs have been confirmed?
David Lidington - Cabinet Office minister and Chancellor of the Duchy of Lancaster
Brandon Lewis - Chair of the Conservative Party and Minister Without Portfolio
Amber Rudd remains Home Secretary
Philip Hammond remains Chancellor of the Exchequer
David Davis remains Secretary of State for Exiting the EU
Boris Johnson remains Secretary of State for Foreign and Commonwealth Affairs
Sajid Javid becomes Secretary of State for Housing, Communities and Local Government (was Communities and Local Government)
Jeremy Hunt becomes Secretary of State for Health and Social Care (was Health)
David Gauke becomes Lord Chancellor and Justice Secretary
Karen Bradley becomes Northern Ireland Secretary
Liam Fox remains International Trade Secretary
Chris Grayling remains Secretary of State for Transport
Penny Mordaunt remains Secretary of State for International Development
Michael Gove remains Environment Secretary
Damian Hinds becomes Education Secretary
Esther McVey becomes Work and Pensions Secretary
James Cleverly - Deputy Chair of the Conservative Party
Chris Skidmore - CCHQ Vice-Chair for Policy at CCHQ
Maria Caulfield - CCHQ Vice-Chair for Women
Kemi Badenoch - CCHQ Vice-Chair for Candidates
Ben Bradley - CCHQ Vice-Chair for Youth