NSW Finance Minister Greg Pearce has been sacked for breaching the ministerial code of conduct, Premier Barry O'Farrell says.
Mr O'Farrell says he told Mr Pearce of his decision over the phone at 1.45pm (AEST) on Thursday.
It follows months of allegations of wrongdoing and questionable conduct by Mr Pearce.
On Thursday, after previously standing by Mr Pearce, Mr O'Farrell said the finance minister had failed to declare a conflict of interest in appointing lawyer Richard Fisher to the board of Sydney Water.
Mr Pearce's wife reported to Mr Fisher in her area of work, Mr O'Farrell said.
"The ministerial code of conduct is very clear," Mr O'Farrell told reporters.
"I've repeatedly said I expect the highest standards from my government.
"Where codes are broken there will be consequences."
Mr Pearce will be replaced by Disabilities Services Minister Andrew Constance.
John Ajaka will join cabinet as Mr Constance's replacement.
Labor leader John Robertson said the opposition had for months been calling on Mr O'Farrell to sack Mr Pearce.
They included being drunk in parliament, misusing taxpayer funds for private travel and issues around his pecuniary interests and board appointments.
Mr Robertson said Thursday's decision to show Mr Pearce the door came after Mr O'Farrell had gagged debate and blocked Labor from referring Mr Pearce to the ICAC.
"The premier has shielded Mr Pearce for months," he said.
"After the long list of allegations that have been raised by the Labor opposition ... Greg Pearce shouldn't have still had a job to be sacked from."
He called on Mr O'Farrell to order a full investigation into all board appointments by Mr Pearce.
Mr Pearce has been under pressure recently after allegations he was drunk during a June sitting of parliament.
The minister had to be assisted off the floor of the house during debate on June 3.
He denied being drunk, saying he had only consumed between two and three drinks at a Liberal Party branch fundraiser at Parliament House. In the same month it was found Mr Pearce breached ministerial travel guidelines by booking a private trip to Canberra through the government's travel agency.
Mr Pearce paid for the bill upon his return, but saved himself $188 by using the contractor.
He later repaid that money. In mid-June Mr Pearce publicly apologised over the drinking allegations and took a month off work to recover from "stress and exhaustion".
Mr O'Farrell told reporters on Thursday the alleged travel expenses rort was commensurate with a breach of "vague and unclear guidelines", unlike his failure to declare a conflict of interest over Mr Fisher.
Mr Pearce had failed to disclose that his wife, Shauna Jarrett, worked at the University of Sydney in an area which reported to Mr Fisher, who is general counsel at the university.
"Here there's not vagueness, there's no lack of clarity," Mr O'Farrell said.
"Here was a clear breach of the ministerial code of conduct."
Mr Fisher would keep his position with Sydney Water, Mr O'Farrell said.
Greens MP John Kaye said the sacking of Mr Pearce came after the Independent Commission Against Corruption (ICAC) made damning corruption findings against former Labor MPs Eddie Obeid and Ian Macdonald.
"Barry O'Farrell had no choice but to sack Greg Pearce for engaging in the cronyism that has become a byword for the governance of NSW," Dr Kaye said.
"Openness and accountability are the only way to cure the disease of arrogance that brought down Greg Pearce and Labor ministers before him.
"The people of NSW have had enough of politicians treating the public with contempt."
