The 55-year-old Conservative lawmaker was appointed transport minister when the coalition government took office in May 2010, but has now been moved into one of the toughest jobs in the cabinet.

Downing Street confirmed his appointment at the Ministry of Defence, saying his position at the department of transport would be filled by Justine Greening, a junior finance minister.

Hammond comes from a business background and has not taken the defence brief before, despite serving in numerous departments during the Conservative party's 13 years of opposition, which began as he entered the House of Commons in 1997.

But commentators described him as a safe pair of hands, a "reassuringly boring" appointment to calm the waters at the MoD.

Hammond also proved his appetite for spending cuts during three years as the Tories' Treasury spokesman, which will be useful in pushing through the planned eight-percent reduction in the defence budget in the next four years.

The Oxford-educated father-of-three becomes Britain's seventh defence secretary in 10 years, and takes over at a sensitive time.

Britain has about 9,500 troops in Afghanistan as part of the NATO-led operation against the Taliban, although they are due to be withdrawn by 2015.

British planes played a major role in the NATO campaign in Libya and Royal Air Force planes are still bombing the remnants of deposed Libyan leader Moamer Kadhafi's forces.

"There are few more important jobs than Secretary of State for Defence, particularly when we've got our troops engaged on active service in two difficult campaigns," junior defence minister Peter Luff told the BBC earlier.

"Libya looks like it's winding down, thank heavens, after the actions there. But Afghanistan is still a very lively, important theatre where our very brave servicemen and women are risking everything still for queen and country."

Fox had fought hard to ensure the defence cuts were less than in many other government departments, but he also displayed a determination to confront military top brass about years of mismanagement and overspending.

He had also begun a major reform of how defence is structured and managed, which Hammond must now continue, including shrinking the defence board that takes major decisions and creating a new joint forces command.

Hammond worked in a variety of business environments, including manufacturing, property and construction and oil and gas, before becoming an MP in 1997.

"Fundamentally you want a very good solid person in there, who is prepared to roll his sleeves up and get on with the detail," said Conservative lawmaker Bob Stewart, a former colonel in the British army.

A disciple of hardline Tory legend Margaret Thatcher, the 50-year-old former medical doctor was forced out over his friendship with Adam Werritty, who accompanied him on numerous overseas trips despite having no official role.

As a Scot who grew up in social housing, Fox had put up a fight to stay, using the debating skills learned at Glasgow University to defend himself with the same confidence that saw him flourish over his 19 years in Westminster.

But his unorthodox mode of working, bypassing the strict protocol concerning ministerial aides, sparked a row that refused to die.

An inquiry into his behaviour was due next week, but he jumped before he was pushed.

Prime Minister David Cameron said he was "very sorry" to see him go, even though Fox was never a natural ally, both in background and outlook, and fought him for the leadership of the Conservative party in 2005.

Fox grew up in social housing in East Kilbride, a town outside Glasgow, and attended the local school, whereas many of his cabinet colleagues -- including Cameron -- went to elite private schools.

He is a proponent of traditional Conservative values, which had put him at odds with Cameron's more socially liberal, "compassionate Conservatism".

These include a strong belief in Britain's "special relationship" with the United States as espoused by Fox's hero, former prime minister Thatcher, who attended his 50th birthday party last month.

Fox's determination to look to the United States rather than the European Union put him at odds with other members of Cameron's government, and reports suggested he relied on friends such as Werritty to help promote his cause.

Werritty worked for a charity Fox set up to promote US-UK ties, Atlantic Bridge, which was closed down after charity regulators deemed it too political, as well as reportedly linking him up with other like-minded associates.

Newspaper reports on Friday suggested Werritty's frequent trips with Fox were paid by financial backers linked to Israel and a private security firm.

Fox is famously sociable -- his parties are legendary -- and has always boasted a wide circle of friends, from Australian pop star Natalie Imbruglia to assassinated former Sri Lankan foreign minister Lakshman Kadirgamar.

But he has also faced continued rumours about his private life, which he challenged on the occasion of his 2005 wedding to fellow doctor Jesme.

"I know that some people use smears and I have heard them for years. They'd say, 'Why are you not married? You must be a playboy or a wild man or gay,' or whatever," he said.

"Well, I'm getting married in December and I'm perfectly happy with my private life."

Fox was first elected to parliament in 1992 and rose quickly, taking a job as a junior Foreign Office minister under prime minister John Major before representing his party on health and then defence while in opposition.

He was appointed defence secretary after the May 2010 election, when Cameron formed a Conservative-led government with the centre-left Liberal Democrats.

Fox and Cameron have clashed in government, with Fox warning in a leaked letter last year that plans to slash the defence budget to help reduce the deficit risked seriously damaging morale in the armed forces.

But he has also pushed through the cuts, confronting military chiefs over what he has described as years of overspending and mismanagement, and played a key role in Britain's involvement in the NATO operation in Libya.