Conservative donor and venture capitalist John Nash has been appointed a minister in the Department for Education.
Mr Nash, who will be made a life peer in order to take up his post, was appointed a non-executive director of the Department by Education Secretary Michael Gove in 2010.
Mr Gove said today that his "vast knowledge of the education sector" made him the best person to be junior minister for schools, replacing Lord Hill of Oareford, who was appointed Conservative Leader in the Lords earlier this week.
The new Lord Nash and his wife Caroline have donated a total of £182,000 to the Conservatives since 2006.
Lord Nash is the founder of the education charity Future, which sponsors academy schools, including Pimlico Academy and Millbank Academy in London.
Downing Street said that, in his new role, he will not take any decisions on Government policies with an impact on the charity.
He will also step away from all relevant business interests while serving as a minister and will not take a ministerial salary.
David Cameron's official spokesman said: "What qualifies him for the job is his extensive knowledge of the education sector.
"He has had a role in an educational charity, but as part of his appointment, the (Education Department) permanent secretary and the Cabinet Office have agreed how to handle any areas in which there might be a perceived conflict or a conflict of interest, and of course he will not be taking any decisions where that might be the case.
"He will not take any general policy decisions in which Future the charity are referred to, may be involved or are perceived to be involved."
Mr Gove said: "I'm delighted that John has joined the education team. He has vast knowledge of the education sector and is the best person to drive through reform started by Lord Hill and continue to raise standards.
"Jonathan Hill has been a fantastic minister whose energy and passion has ensured that the academies and free schools policy has been a great success. I am hugely in his debt for the work he has done since the coalition was formed."
And Lord Nash said: "I have greatly enjoyed working in my capacity as a non-executive director with ministers and officials in the Department over the past two years.
"The Department is full of highly talented people and I greatly look forward to working even more closely with them.
"I believe that every child and young person should have the right to a really good education and that education is the key to the future success of our country."
Labour vice-chair Michael Dugher said: "David Cameron is much better at creating jobs for his big-money donors than he is at providing jobs for the millions of young and long-term unemployed.
"This looks like jobs for the boys from an out-of-touch Prime Minister.
"With yesterday's promotion of Lord Popat and now John Nash handed a peerage and a new post, two major Tory donors have been given ministerial jobs in just two days.
"Nice work if you can get it."