Kwasi Kwarteng has been sacked as Chancellor by Prime Minister Liz Truss.
It comes amid huge pressure on the Government to reverse course on its mini-budget.
Kwarteng cut short a trip to the US to fly back to London on Friday for crunch talks.
His departure from the Treasury makes him the second-shortest serving chancellor since the start of the 20th century.
Kwarteng confirmed in a statement that he had been asked to stand aside by the Prime Minister.
In a letter addressed to Truss, Kwarteng wrote: “You have asked me to stand aside as your Chancellor. I have accepted.
“When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.
“As I have said many times in the past weeks, following the status quo was simply not an option.
“For too long this country has been dogged by low growth and high taxation – that must still change if this country is to succeed.
“The economic environment has changed rapidly since we set out the Growth Plan on September 23.
“In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events and I commend my officials for their dedication.”
Kwarteng said that it had been “an honour” to have served as Truss’ first Chancellor.
He continued: “It is important now as we move forward to emphasise your government’s commitment to fiscal discipline.
“The medium-term fiscal plan is crucial to this end and I look forward to supporting you and my successor to achieve that from the backbenches.
“We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one.
“It has been an honour to serve as your first Chancellor. Your success is this country’s success and I wish you well.”
Having been appointed by Truss on September 6, Kwarteng has been in the job for 40 days.
It is only ahead of Iain Macleod, who served as chancellor between June 20 and July 20 in 1970 under Edward Heath.
Kwarteng’s successor, Nadhim Zahawi, spent only 62 days as chancellor in the final days of Boris Johnson’s premiership following mass Cabinet resignations.
The sacking of Truss’ chancellor comes after weeks of market turmoil after the pound slumped to a record-low against the dollar in the wake of the biggest programme of tax cuts for 50 years.
Kwarteng called it “a new approach for a new era,” as he said he was “determined” to break the cycle that has led to a large tax burden on business and the public.
The chancellor suggested his announcements were just the beginning of the Government’s agenda designed to revive the UK’s stagnant economy.
But amid the market turmoil and a series of polls showing the Conservatives losing the next election, Tory MPs began putting pressure on the PM to change course.
Senior party members were circulating names for who should replace Truss, including suggestions that her leadership rival and former chancellor Rishi Sunak could be put forward on a joint ticket with fellow candidate Penny Mordaunt.
It came after a bruising meeting between Truss and the influential 1922 committee.
Kwarteng cut short his trip to the US where he was meeting with senior officials from International Monetary Fund (IMF) which had issued warnings about the chancellor’s growth plans.
His return to Downing Street came after Truss reportedly held crunch talks with senior party members about reversing the plans that she repeatedly said she was committed to.