Jo Johnson has been moved from his job as universities minister following a row over the appointment of Toby Young to the new universities regulator.
The move came as Theresa May attempted to refresh her government by promoting MPs from the younger generation.
Young, a journalist who has also set up free schools, early this morning announced he would not take up a position at the Office for Students amid a backlash over past comments about women, LGBT people and the disabled.
Despite his resignation, Jo Johnson continued to defend Young shortly before he was moved by the prime minister on Tuesday afternoon.
Jo Johnson, the MP for Orpington, has also been appointed minister for London ahead of what could be tough local elections in the capital this year for the Tories.
His precise responsibilities at the Department for Transport have yet to be confirmed by the department - but it is possible he will have responsibility for expanding Heathrow.
His brother, Foreign Secretary Boris Johnson, has been a vocal critic of the plan to build another runway at the west London airport.
May’s attempt to refresh her Cabinet yesterday was partially derailed after Justine Greening resigned rather than accept a sideways move and Jeremy Hunt insisted on remaining as health secretary.
Today she reshuffled the junior ministerial ranks. Brandon Lewis, the new Tory chairman, said the changes at lower levels would be a “breath of fresh air” for the government.
Mark Garnier, who was cleared of wrongdoing after asking his secretary to buy sex toys, has lost his job as an international trade minister.
Sam Gyimah has replaced Jo Johnson in his old job as universities minister.
Dominic Raab, who had served as a justice minister and has long been tipped for a promotion, has been handed the high profile housing minister brief.
Rory Stewart, a former diplomat who had served as a joint Foreign Office and development minister, has been made a justice minister.
Alok Sharma, who was housing minister in the wake of the Grenfell fire, has been made employment minister.
May has also moved to promote women. Suella Fernandes, an ardent Brexiteer, has been made a minister in David Davis’ Department for Exiting the EU.
Harriett Baldwin has been moved from the Ministry of Defence to the Foreign Office. Caroline Dineage has been promoted from the department of work and pensions to become a senior health minister. Margot James has been a made minister of state in the Department for Digital, Culture, Media and Sport. And former backbencher Lucy Frazer has been made a justice minister.
The prime minister has also moved to promote MPs from an ethnic minority background.
Rishi Sunack, who was elected in 2015, has been made a minister in the new Minister of Housing, Communities and Local Government. And Nadhim Zahawi has been made an education minister.
Casualties in the latest round of the overhaul include Robert Goodwill, who loses his job as minister for children and families, Philip Dunne who is removed as a health minister and John Hayes who is leaving the Department for Transport.