As Hain focuses on clearing his name in a police investigation over campaign financing, former culture secretary James Purnell takes over Hain's brief at the Department for Work and Pensions.
Electoral authorities began an investigation into Hain over his late declaration of more than 100,000 pounds to his unsuccessful campaign for the Labour Party's deputy leadership.
On Thursday, Hain said he had no alternative but to resign after the electoral commission said it had referred his case to the police.
Hain, now under police investigation, vowed his failure to declare the funds at the correct time was "an innocent mistake".
His resignation dealt a fresh blow to Brown, whose popularity has slumped in past months, leaving Labour far behind the Conservative Party in polls.
Just seven months into his premiership, Brown's reputation has been hit by a crisis over the mortgage lender Northern Rock, administrative blunders and signs of a faltering economy.
Hain's resignation triggered a small reshuffle of Brown's fledgling cabinet.
Also starting new jobs on Friday were Andy Burnham who was moved to the post of culture secretary from chief secretary to the Treasury. Yvette Cooper replaces Burnham at the Treasury.
Caroline Flint began work as the new housing minister and Paul Murphy was named Welsh secretary.
Purnell's appointment was welcomed by the charity Age Concern.
"He has already helped to deliver the most important pensions reform of our generation and we hope he continues to be an effective advocate for older people," Gordon Lishman, director general of Age Concern, said in a statement.
