A government adviser on welfare reform has quit to become a frontbench spokesman for the Conservatives.
Sir David Freud, architect of Labour's planned benefit system shake-up, is to be appointed shadow welfare minister by Tory leader David Cameron.
Mr Cameron described Sir David, who will become a peer, as a "hugely impressive figure".
Labour sources said Sir David had been an independent adviser and was never considered a party-political supporter.
Sir David put forward measures in a green paper last year to encourage more disabled people and lone parents into employment.
It won the support of the Conservatives, while sparking outrage from many on the Labour left.
Sir David had previously proposed opening up the welfare system to private sector providers in a bid to get the unemployed back into work.
Mr Cameron told BBC One's Politics Show: "He's a hugely impressive figure."
He added: "One of the big challenges is to get people back into work and getting people who have been on benefits for a long time back into work.
"I think David Freud has done more than anyone else to highlight how we can improve our welfare system and our training and jobs system and he [Sir David] will be a key part of a new Conservative government."
It is understood that Mr Cameron and shadow chancellor George Osborne have been speaking regularly to the City financier about welfare and the economy for some time.
The Conservatives promised a "full-blooded version" of what they termed the government's "half-hearted" implementation of Sir David's radical proposals.
Sir David said: "By the end of this recession there are likely to be more people on welfare than ever before. In particular we run the risk that another generation of long-term unemployed become condemned to languish outside the labour market for the rest of their lives.
"I see this as one of the most important challenges of the next few years. I am therefore delighted to accept David Cameron's invitation to join the Conservative team to work further on the solutions that will be needed."
In his resignation letter to Work and Pensions Secretary James Purnell, Sir David wrote: "Extension of our arrangement would be incompatible with the new role I have been offered and accepted.
"I would like to stress how much I have enjoyed and appreciated working for you to improve the shape of welfare provision in this country.
"I believe a base has now been established which sets a direction for this and future governments to build on in the years to come."
The Conservatives will hope that the loss of a man closely identified with one of his government's key programmes will be embarrassing to Prime Minister Gordon Brown at a time when unemployment is nearing two million.
However, Labour strategists believe the party may be able to exploit differences between Mr Cameron and his new peer.
Sir David has backed policies such as making allowances for drug addicts conditional on them undergoing rehabilitation and a requirement for lone parents of children aged under five to prepare for work.
A Department for Work and Pensions spokesman said: "We can confirm we discussed this matter in advance with David Freud and he has left his role as an adviser to the department by mutual consent.
"We thanked him for his important work in building consensus around the welfare reform green paper in July and wished him well for the future."