Update 3.45pm: Theresa May has kept the biggest beasts in her Cabinet in post in a reshuffle forced by the resignation of Damian Green after he admitted lying over pornography on his office computer.
Former justice secretary David Lidington was appointed to Mr Green's old position of Minister for the Cabinet Office, but did not inherit the title of First Secretary of State which marked Mrs May's long-time friend and ally as her effective deputy.
It is understood that Mrs May does not intend to appoint a first secretary of state in what is expected to be her biggest reshuffle since taking office in 2016.
Downing Street confirmed Chancellor Philip Hammond, Foreign Secretary Boris Johnson, Home Secretary Amber Rudd and Brexit Secretary David Davis are all keeping their current jobs.
But Northern Ireland Secretary James Brokenshire has resigned from the Cabinet on grounds of ill-health, just weeks ahead of major surgery for a lesion on his right lung.
Mr Lidington was also named Chancellor of the Duchy of Lancaster, replacing Sir Patrick McLoughlin, who was sacked as Conservative chairman following criticism of his role in the party's poor performance in last year's snap election.
Brandon Lewis has been named the new party chairman, amid farcical scenes which saw the Tories' official Twitter account incorrectly announce that the job had gone to Chris Grayling.
Speculation remained rife at Westminster that several big names were on their way out of the Cabinet, with Education Secretary Justine Greening, Business Secretary Greg Clark and the Leader of the Commons Andrea Leadsom all reported to be vulnerable as the Prime Minister seeks to assert her authority.
Mrs May indicated the door would be open for a return to Government after Mr Brokenshire, a close ally since their days in the Home Office, has overcome his health difficulties, telling him in a letter that she was looking forward to "working alongside you again when you are back to full health".
Former immigration minister Mr Lewis, who also takes the title of minister without portfolio, said he was "honoured" to be appointed party chairman less than eight years after arriving in the House of Commons as MP for Great Yarmouth in 2010.
His promotion appeared to mark a concerted effort to revitalise Conservative campaign headquarters, with the appointment of a number of younger MPs from diverse ethnic backgrounds to senior roles in the party, including former soldier James Cleverly as deputy chair.
Junior minister Chris Skidmore was appointed vice chairman for policy, Maria Caulfield as vice chair for women, and 2017 intake MPs Kemi Badenoch and Ben Bradley as vice chairs for candidates and youth respectively.
But the shake-up was overshadowed by a blunder at HQ which saw the official @conservatives Twitter feed congratulate Transport Secretary Mr Grayling on becoming chairman.
The tweet was deleted within moments of being sent, but not before it had been shared by a number of Tory MPs and reported on TV.
A Tory source said CCHQ political director Iain Carter sent the message to a majority of the party's MPs via WhatsApp, before deleting it and saying it was sent in error.
And there was controversy over Ms Caulfield's new position, after she led opposition to a parliamentary bid to end the criminalisation of women who terminate their own pregnancies.
Labour's equalities spokeswoman Dawn Butler branded the appointment "appalling", while the British Pregnancy Advisory Service described it as "profoundly disappointing".
Meanwhile, Sajid Javid has had his responsibility for housing added to his existing Cabinet title in a sign of the issue's increasing political importance.
He is now Secretary of State for Housing, Communities and Local Government.
In a letter to the Prime Minister, Sir Patrick McLoughlin said he felt it was the right time to leave the Cabinet "as we discussed some months ago".
The outgoing Tory chairman has faced criticism over the way the general election campaign was run, but Mrs May said he had responded to the challenge with "vigour" and praised his "wisdom, hard work and dedication".
Earlier: Brandon Lewis named as new Tory chairman amid cabinet reshuffle
Brandon Lewis has been named the new chairman of the UK Conservative Party, amid farcical scenes which saw the Tories' official Twitter account incorrectly announce that the job had gone to Chris Grayling.
A tweet on the official @conservatives channel congratulating Mr Grayling on the appointment was deleted within moments of being sent, but not before it had been shared by a number of Tory MPs and reported on TV.
Theresa May's first major reshuffle since taking office in 2016 was also marked by the unexpected departure of Northern Ireland Secretary James Brokenshire, who quit the Government on grounds of ill-health weeks ahead of major surgery for a small lesion to his right lung.
But bigger names were also expected to leave the British cabinet, with Education Secretary Justine Greening, Business Secretary Greg Clark and the Leader of the Commons Andrea Leadsom all reported to be vulnerable as the Prime Minister seeks to assert her authority.
Mrs May's most senior colleagues, including Chancellor Philip Hammond, Foreign Secretary Boris Johnson, Brexit Secretary David Davis and Home Secretary Amber Rudd were all understood to be remaining in post.
Confirming he was leaving Mrs May's top team after almost two years as party chairman, Patrick McLoughlin - who was blamed by many Tories for the party's poor showing in last year's snap election - told Sky News: "I've been in the Cabinet eight years. I have had a very good run and I enjoyed it immensely."
The appointment of Mr Lewis as Sir Patrick's replacement and minister without portfolio was initially overshadowed by the mistaken announcement that Mr Grayling was being moved from Transport Secretary to Conservative chairman.
A Tory source said that CCHQ political director Iain Carter sent the image appearing to confirm Mr Grayling's appointment as chairman to a majority of the party's MPs in a WhatsApp message, before deleting it and saying it was sent in error.
In a major shake-up of CCHQ, the Conservatives announced prominent backbencher James Cleverly as deputy chairman, junior minister Chris Skidmore as vice chairman for policy, Maria Caulfield as vice chair for women, and 2017 intake MPs Kemi Badenoch and Ben Bradley as vice chair for candidates and vice chair for youth respectively.
In a letter to the Prime Minister, Sir Patrick said he felt it was the right time to leave the Cabinet "as we discussed some months ago".
The outgoing chairman has faced criticism over the way the general election campaign was run, but Mrs May said he had responded to the challenge with "vigour" and praised his "wisdom, hard work and dedication".
Justice Secretary David Lidington was seen entering 10 Downing Street, amid speculation he may be in the running for the post of First Secretary of State, left vacant by Damian Green's resignation last month.
In a break from tradition, Mrs May has asked not only new appointees but also Cabinet ministers remaining in post to see her at 10 Downing Street. The move has made it more difficult for observers to work out who may be in line for dismissal or a new job.
Ms Rudd, who is expected to stay on as Home Secretary, was also seen entering through the famous black door of Number 10.
Ms Rudd, who pulled up in a black BMW, briefly paused for pictures and greeted journalists before walking through the door.