Sajid Javid stunned parliament yesterday by resigning as chancellor, less than a month before the Spring Budget.
Javid had been expected to continue in his role as chancellor as Prime Minister Boris Johnson conducted a cabinet reshuffle.
But the former chancellor quit after refusing to clear out his team of aides at the PM's request.
"He has turned down the job of chancellor of the exchequer," a source close to Javid told the BBC.
"The Prime Minister said he had to fire all his special advisers and replace them with No. 10 special advisers to make it one team.
"The chancellor said no self-respecting minister would accept those terms."
The PM wasted no time in naming Rishi Sunak as the new Chancellor, despite a lack of senior ministerial experience.
Javid, who succeeded Philip Hammond in July 2019, becomes the first chancellor not to deliver a Budget speech since Iain Macleod, who died suddenly in 1970 less than a month after being appointed by Edward Heath.
The drama cast doubt as to whether or not Spring Budget 2020 will go ahead as planned on 11 March.
However, a Downing Street spokesman claimed "extensive preparations for the Budget will continue at pace".