Nick Clegg paid tribute to his "good friend and a close colleague" Chris Huhne as he announced Ed Davey will replace him as energy secretary.
"I totally understand and respect why Chris Huhne has stood down," the deputy prime minister said in a statement to journalists on Friday.
"He has been really a pioneer in new and groundbreaking policies," Clegg said, as he made it clear Huhne would be welcomed back in government if he cleared his name.
"I'm pleased that Ed Davey has agreed to take up the post," Clegg added, praising Davey as the "right person" to take up Huhne's mantle.
His words came after Huhne stepped down as energy secretary following being charged with perverting the course of justice. He was formally accused on Friday of getting his now-estranged wife Vicky Pryce to accept points for speeding on his behalf. Pryce faces the same charge and both will appear before Crown Court on the 16th of February. David Cameron said Huhne had taken the "the right decision" in resigning.
It is not clear whether Huhne will accept the severance package of more than £17,000 severance pay he's entitled to.
In welcoming Ed Davey to the cabinet, Clegg said the 46-year-old former business minister had a "lifelong commitment" to green issues. Davey was described by Tricia Bamford, a Lib Dem councillor in his Kingston constituency as a "very safe pair of hands."
Nick Clegg's close adviser Norman Lamb will replace Davey in the Department of Business, Innovation and Skills. Cardiff Central MP Jenny Willott becomes an assistant whip, and Jo Swinson becomes Clegg's PPS.
The promotions maintain the agreed proportion of Conservatives and Liberal Democrats around the Cabinet table fixed in the 2010 coalition negotiations.
David Cameron said Huhne had taken the "the right decision" in resigning. But some Lib Dems will rue the departure of one of their hardest-hitting ministers, who was ready to stand up to Conservatives in Cabinet.
Director of Public Prosecutions Keir Starmer told a news conference on Friday morning: "We have concluded that there is sufficient evidence to bring criminal charges against both Huhne and Pryce for perverting the court of justice." He urged journalists to ensure that both Huhne and Pryce received a fair trial.
Mark Gettleson, Senior Political Analyst at Dods Engagement told Huff Post UK the resignation could damage the party's brand.
"This must be taken in the context of the Westminster bubble, outside of which people will be far more focused on the John Terry story. But at the same time, what is the cumulative effect of the sheer number of high-level personal indiscretions on the wider Liberal Democrat brand?
"As well as their difficulties amid the coalition, resignation amid scandal could become part of the way the party is perceived as a whole - and that would be difficult to overcome."
Friends of the Earth's executive director Andy Atkins said: "Chris Huhne has championed the environment in an administration that's shown little enthusiasm for keeping David Cameron's pledge to be the greenest Government ever.
Chris Huhne was elected to Parliament in 2005 and narrowly lost the Lib Dem leadership contest to Nick Clegg in 2007. He held several frontbench spokesman positions when the Lib Dems were in opposition, including home affairs and Treasury.
When the coalition was formed in 2010 he became energy secretary, but only a month after the election his affair with Carina Trimingham was revealed and he separated from Vicky Pryce three months later.
*More reaction to Huhne's resignation*
Thank you for your letter informing me of your decision to resign from the Government. I believe you have made the right decision under the circumstances. You have made a very significant contribution to the Government, of which you can be justly proud.
"David Cameron promised this would be the "greenest government ever". But on his watch the Green Investment Bank has been delayed, thousands of jobs and businesses in the solar industry have been put at risk and the UK has fallen from third in the world for investment in green growth to thirteenth. The appointment of a new Energy and Climate Change Secretary is a much-needed opportunity for the government to change course. "With record energy bills, we need a government that is prepared to stand up to vested interests in the energy industry and put the public first. Otherwise people will be right to conclude that Ed Davey is just as out of touch with families struggling with the cost of living as the rest of this government."
"Chris Huhne is a very, very good, effective minister in the government, made a major contribution. It's a very sad day for him but we're confident he will clear his name and be back joining us."
"I fully understand your decision to stand down from government in order to clear your name, but I hope you will be able to do so rapidly so that you can return to play a key role in government as soon as possible."
I intend to mount a robust defence against the charges brought against me, and I have concluded that it would be distracting both to that effort and to my official duties if I were to continue in office.
Liberal Democrat MEP for North West England Chris Davies told the BBC: "Whatever the result of the court case, this has proven to be a horrendous Greek tragedy and it is one not just for Chris Huhne but also for Vicky Pryce, his former wife, who of course is Greek."
"Chris Huhne will be a tough act to follow. His achievements in getting the Green Bank and stricter legally binding carbon targets are a physical legacy of what he was able to accomplish. "He has been a vocal advocate for the green agenda in a government whose green credentials are looking more than a little tarnished."
Mark Gettleson, Senior Political Analyst at Dods Engagement, told Huff Post UK: "This must be taken in the context of the Westminster bubble, outside of which people will be far more focused on the John Terry story. But at the same time, what is the cumulative effect of the sheer number of high-level personal indiscretions on the wider Liberal Democrat brand? As well as their difficulties amid the coalition, resignation amid scandal could become part of the way the party is perceived as a whole - and that would be difficult to overcome."
"It has taken a long time and there's been speculation about Chris Huhne for many, many months. And I think it's right that we're beginning to reach resolution on this - I think that's good for government and I think it's probably good for Chris Huhne as well. "I am pleased that the police and the CPS have investigated this and reached the conclusions that they have. I think it's right and proper that they took the complaint seriously and I'm pleased that they investigated it."
"The loss of David Laws was catastrophic in the sense that he was an architect of the Orange Book [a book urging the party to modernise], with Huhne he wasn't the architect. What happens if he's found innocent, then he could becoming a very different power base for the party."
"Chris Huhne has championed the environment in an administration that's shown little enthusiasm for keeping David Cameron's pledge to be the greenest Government ever. "He should be commended for insisting on tougher climate targets and fighting for a Green Investment Bank - but his department's incompetent handling of solar cuts has put 29,000 jobs at risk. "Leaving consumers to compare energy tariffs as a way to tackle soaring bills is woefully inadequate. What we really need is decisive Government action to get us off the hook of expensive fossil fuels and invest in clean British energy instead. "The new Energy Secretary must stand firm against George Osborne's anti-green agenda and make the case that protecting our environment is a way to boost not hinder our economic recovery."