Kwasi Kwarteng has been sacked as chancellor by Liz Truss, amid expectations the prime minister will perform another mini-Budget U-turn.
“You have asked me to stand aside as your chancellor. I have accepted,” he said in a letter.
Truss will hold a press conference on Friday afternoon in Downing Street as she battles to rescue her premiership.
It has been reported one of the measures that could be scrapped was the plan not to increase corporation tax.
On Thursday, Kwarteng said “absolutely 100% - I am not going anywhere” when asked if he would be remaining as chancellor.
He then dashed back to London from Washington early on Friday and was fired by the prime minister.
Kwarteng and Truss had been longtime allies and friends.
In her letter to Kwarteng, Truss said: “Thank you for your service to this country and your huge friendship and support.
“I have no doubt you will continue to make a major contribution to public life in the years ahead.”
The mini-Budget, which caused market turmoil and led to the Tory poll ratings tanking, was not just Kwarteng’s plan, it formed the basis of the PM’s leadership campaign.
Westminster is awash with speculation that Conservative MPs could try to oust Truss as leader sooner rather than later.
Labour’s shadow chancellor Rachel Reeves said: “Changing the chancellor doesn’t undo the damage that’s already been done.
“It was a crisis made in Downing Street. Liz Truss and the Conservatives crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage.
“We don’t just need a change in chancellor, we need a change in government. Only Labour offers the leadership and ideas Britain needs to secure the economy and get out of this mess.”
Ed Davey, the Lib Dem leader, has demanded the government call a snap general election.