Arthur Sinodinos says his cancer prognosis is excellent after stepping out of cabinet to focus on his health.
Prime Minister Malcolm Turnbull announced the move as part of a broad reshuffle, saying the former industry minister was unlikely to return from leave until the middle of 2018.
"We wish him all the best in his recovery," Mr Turnbull told reporters in Sydney on Tuesday.
Senator Sinodinos is confident of making a full recovery and returning to a senior ministerial role in the future.
"The prognosis is excellent," Senator Sinodinos said in a statement on Tuesday.
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"Over the coming months, my priority must be to complete my treatment and regain full health."
His responsibilities as industry, innovation and science minister will be absorbed by new Jobs and Innovation Minister Michaelia Cash.
Senator Sinodinos said he had asked the prime minister not to consider him for a ministerial role in the reshuffle, but he will continue his work as a parliamentarian representing NSW.
