Prime Minister Stefan Lofven vowed he would be staying on despite speculation he could call a snap election.
Interior Minister Anders Ygeman, a political heavyweight, is standing down "at his own request", Lofven said at a press conference, adding that Infrastructure Minister Anna Johansson will also step down.
Ygeman reportedly knew about the leak from the national transport agency, which made the private data of millions of citizens accessible abroad, but failed to tell the prime minister.
The scandal has blown up in recent weeks after it emerged that an entire database on Swedish drivers' licences was made available to technicians in the Czech Republic and Romania, with media reporting that the identities of intelligence agents may have been jeopardised.
Lofven's Social Democrat-led minority government has been badly rattled by one of Sweden's largest data breaches in decades, and opposition parties had threatened the coalition with a vote of no confidence.
Many political commentators had expected Lofven to call a snap election at Thursday's press conference -- but he insisted he intends to stay on until his term ends in 2018.
"I have no intention of plunging Sweden into a political crisis," he said, pointing to "formidable challenges" the country is facing including tensions in the Baltic region, Brexit, and the government's plans for social and economic reforms.
"I looked at several alternatives, and I chose the best one for the country," Lofven said.
Defence minister next?
The data leak stems from the Swedish transport agency's hiring of IBM in 2015 to take over its IT operations.
IBM in turn used subcontractors in the Czech Republic and Romania - making the sensitive information accessible by foreign technicians who did not have security clearance.
The Swedish military said information on its personnel, vehicles and defence and contingency planning could have been included in the leak, although the transport agency denied having a register on military vehicles and said there was no indication the data had been "spread in an improper way".
Sweden's Interior Minister Anders Ygeman in Stockholm in 2015. (Getty) Source: AFP
Defence Minister Peter Hultqvist kept his job in the reshuffle despite facing claims that, like the interior minister, he knew about the scandal but failed to tell the premier.
However, Hultqvist still faces the threat of being forced out in a censure motion launched by the opposition on Wednesday against all three ministers caught up in the scandal.
Opposition parties have yet to confirm whether the motion will now go ahead.
Maria Agren, head of the transport agency at the centre of the leak, quit in January for undisclosed reasons but has since confessed to violating data handling. She accepted a fine of 70,000 Swedish kronor (around 7,000 euros, $8,000).
Hultqvist and Ygeman reportedly found out about the leak last year, but the prime minister was only informed in January.
Johansson, who oversees the transport agency, said her former state secretary had known about the leak but kept the information hidden from her - triggering heavy criticism among opposition parties who said she should have known what was happening.
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