A member at the core of the fourth-generation political leadership, Mr Tan Chuan-Jin, 48, will be the new Speaker of Parliament.
Prime Minister Lee Hsien Loong will nominate him for the post when the House sits on Monday.
The decision, PM Lee said yesterday in a Facebook post, was a very difficult one as it meant "losing an effective and activist minister".
But he said Mr Tan stood out as the best choice for the post vacated by Madam Halimah Yacob, 63, who resigned on Aug 7 to contest this month's presidential election.
"It was not easy to find a suitable replacement," PM Lee said. "As Speaker, Chuan-Jin will have to preside over parliamentary debates and ensure fair and full discussion of national issues. Chuan-Jin has the temperament and personality for this role." He added: "Chuan-Jin remains an important member of my team, though in a different role."
The Prime Minister's Office (PMO) said in a statement: "PM Lee has briefed PAP MPs on his nomination and received their full support."
Many Singaporeans were surprised by the move, and Dr Gillian Koh of the Institute of Policy Studies noted that many expected a senior backbencher to fill the post.
Mr Tan will resign as Minister for Social and Family Development, as the Speaker cannot be elected from among MPs who are office holders.
Taking over the ministry's helm from Monday is Mr Desmond Lee, 41, who will remain Second Minister for National Development.
Mr Tan said he was glad to accept PM Lee's nomination and hoped fellow MPs would support it. He said: "Good ideas can come from both sides of the House, as does good intent. In fact, they abound throughout the length and breadth of our society. Our duty must be to harness these for the common good."
PM Lee also singled out Mr Tan's deep interest in social issues and helping the disadvantaged. He will continue to oversee SG Cares, the movement to build a caring society.
Mr Lee said Mr Tan has left him "very big shoes to fill". Mr Lee will no longer be Minister in the PMO and Second Minister for Home Affairs.
Minister in the PMO Josephine Teo, 49, will take over as Second Minister for Home Affairs. She will remain Second Manpower Minister, but will no longer be Second Minister for Foreign Affairs.
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