Coffey, who had served as the head of DEFRA since October, joins Suella Braverman as among the sacked cabinet ministers.
Braverman said serving as home secretary “has been the greatest privilege of my life to serve as home secretary”.
“I will have more to say in due course”, she added.
The move came ahead of David Cameron’s stunning elevation as foreign secretary. As part of the reshuffle, Sunak handed the former PM a life peerage — a necessary requisite for him to serve in cabinet.
Meanwhile, James Cleverly has replaced Braverman as home secretary.
In a statement this afternoon, Thérèse Coffey said: “Having been a minister since July 2014, and having served all five Conservative prime ministers, I consider it is now the right time to step back from government.”
She added: “I look forward to supporting you from the backbenches and working together for a Conservative majority at the next election, which I believe to be profoundly in the national interest.”
Rishi Sunak thanked outgoing environment secretary Thérèse Coffey for “years of dedicated ministerial service and your friendship to me personally”.
He said her “teamwork and positivity” had “helped bring everyone together” during a “difficult time for our party” when she took on roles as both health secretary and deputy prime minister.
“I want to express my gratitude to you for your years of dedicated ministerial service and your friendship to me personally”, he said in a letter to Coffey.