Business Secretary Vince Cable was divested of all responsibilities for competition and policy issues related to media, broadcasting, digital and telecoms by the prime minister after he boasted to undercover reporters that he had "declared war" on Rupert Murdoch.
Cable will play no role in the government's public interest intervention on NewsCorp's bid to take full control of BSkyB. Conservative secretary for culture, media and sport Jeremy Hunt will handle the responsibilities that were taken away from Cable.
Cable managed to retain his cabinet seat despite being called by the prime minister to Downing Street to be told that he would have no further role in the decision on BSkyB.
A Downing Street statement said, "The prime minister is clear that Mr Cable's comments were totally unacceptable and inappropriate."
Cable responded with a statement saying:"I fully accept the decision of the prime minister and deputy prime minister. I deeply regret the comments I made and apologise for the embarrassment that I have caused the government."
Labour leader Ed Miliband called for Cable's removal from the cabinet, saying he had violated the ministerial code on objectivity.
Media commentators were quick to point out that the episode explains why politicians should not be refereeing on competition-related issues.