Philip Hammond will replace Liam Fox as defence secretary after Fox's resignation on Friday afternoon.
Treasury minister Justine Greening will now become transport secretary. Hammond's appointment was backed today by influential Tory MP Patrick Mercer, who told Sky News he could think of "few greater" replacements.
“Philip Hammond is an extremely capable man – that’s not a name that I’ve heard briefed but I’m very, very pleased to hear that – a very competent, safe pair of hands with a straightforward view of life.”
Hammond became transport secretary when the coalition was formed in May 2010, after shadowing the chief secretary position in opposition.
As transport secretary he was responsible for implementing the government's controversial high speed rail policy.
The former businessman has been a Conservative MP since since 1997 and is viewed by many in the party as a safe pair of hands - but questions remain over how he be regarded by military top brass.