Martin Hamilton-Smith made the shock announcement on Tuesday, saying he was putting the people of SA first.
"What people deserve now is good, effective government. They deserve certainty. My decision, I think, will do that," he said.
Premier Jay Weatherill said Mr Hamilton-Smith would become a minister and take on the portfolios of investment and trade, defence industries and veterans affairs.
Mr Hamilton-Smith said Mr Weatherill had reached out to him after the state election earlier this year.
"This is a difficult decision. It is one I considered most carefully over number of days and weeks," Mr Hamilton-Smith said.
"It has been a tough decision, but it's right decision - and for that reason I'll sleep well."
Mr Weatherill says members of the government were unanimous in their support of Martin Hamilton-Smith joining the party and government.
[They are] supportive. They can see the obvious benefits...the obvious stability for the government on the floor of parliament," Mr Weatherill said.
Mr Hamilton-Smith's move gives the state Labor government extra support in parliament.
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