Michael Gove has been sacked as Justice Secretary as Theresa May continued the process of appointing ministers to her new administration.

Downing Street declined to comment on reports that the former UK Conservative Party leadership contender had left the government, but it is understood that Mrs May has told him he will not form a part of her team.

Mr Gove becomes the second major casualty from David Cameron's cabinet, joining former Chancellor George Osborne on the backbenches.  

Education Secretary Nicky Morgan also lost her job, announcing on Twitter: "Disappointed not to be continuing as Education Secretary and minister for women and equalities - two wonderful roles it's been a privilege to hold."

Also gone is Culture Secretary John Whittingdale who tweeted: "Has been a privilege to serve as Culture Secretary. I wish my successor every success & will continue to support creative industries"

Mr Gove's departure came on the second day of a round of appointments which has already seen fellow-Brexiteer Boris Johnson - the man whose leadership hopes he dashed - installed as Foreign Secretary, Philip Hammond becoming Chancellor and Amber Rudd Home Secretary.

Mr Hammond announced that he has no plans for an emergency budget of the kind which his predecessor George Osborne had warned would be necessary within months if Britain voted to leave the EU.

The Chancellor said the referendum result caused an economic "shock" and did not rule out the possibility of an economic slowdown.

But the new Government will do "whatever is necessary to keep the economy on track" and the pace of deficit reduction could be curbed, he suggested.

Mr Hammond told BBC Radio 4's Today programme: "We will face some challenges in the short term in managing the economy. It has had a shock as a result of the decision on June 23 to leave the European Union.

"That has shaken confidence, it has caused many businesses to pause investment decisions that they were making.

"The challenge for us now is to send signals of reassurance about the future as quickly and as powerfully as we can to the international investment community, to British business and to British consumers so we can get those decisions starting to be made and investments starting to flow into the UK."

Mr Hammond said that investment, job creation and business confidence had all been hit since the referendum result.

"There has been a chilling effect. We have seen an effect in markets, we have seen business investment decisions being paused because businesses now want to take stock, want to understand how we will take forward our renegotiation with the EU, what our aspirations are for the future trading relationship between Britain and the European Union."

Mr Hammond will use his first morning in the job to meet Bank of England governor Mark Carney.

The appointment of Mr Johnson as Foreign Secretary shocked Westminster and the wider world.

Asked about the former London mayor's new role, which means he is in charge of MI6, Mr Hammond told Today: "The Cabinet works collectively and we have got a range of different characters and a range of different styles and a range of different talents.

"The lead and the tone will be set by the Prime Minister."

Mr Hammond said the Foreign Office, Treasury and Home Office were "well oiled machines" with "highly skilled and competent" civil servants to support new ministers.

JOHNSON SHOCK

Labour leadership contender Angela Eagle, whose astonished reaction to Mr Johnson's appointment was widely shared online on Wednesday evening, told the Press Association: "I couldn't believe that somebody who went round the country telling blatant lies could be rewarded in that way, and I thought immediately of the Hillsborough families because he repeated the slurs about them and then he went up to Merseyside and insulted Merseyside and was forced by Michael Howard to go back up and apologise.

I couldn't believe that somebody who went round the country telling blatant lies could be rewarded in that way, and I thought immediately of the Hillsborough families because he repeated the slurs about them

"And then I thought about what he'd said about President Obama, that somehow his Kenyan roots had made him more pro-European.

"I don't think that that's the kind of behaviour of a British Foreign Secretary."

Labour's former shadow education secretary Lucy Powell said the departure of the two secretaries of state to have overseen schools during the Cameron years would be welcomed by teachers.

"Teachers everywhere will rejoice that both Michael Gove and Nicky Morgan are no longer part of the Government," said Ms Powell, adding: "Just (schools minister) Nick Gibb to go."