Ms Kaye is 36 and has been an MP since 2008.
She is the MP for Auckland Central and held the portfolios of Civil Defence, ACC, Youth Affairs and Associate Education.
Gerry Brownlee will take over Civil Defence, Nathan Guy will be acting ACC minister, Anne Tolley will take over Youth Affairs and Hekia Parata will take over Ms Kaye's Associate Education responsibilities.
In a post on Facebook yesterday afternoon, Ms Kaye said the diagnosis was "devastating news for me and my family".
"Having the opportunity to serve NZ as the MP for Auckland Central and a cabinet minister continues to be a huge privilege," she said.
"I have always worked hard and given everything I have to both roles.
"I told the [Prime Minister John Key] on Friday and I took a leave of absence from my ministerial portfolios. The PM has appointed acting ministers to cover my portfolios."
She added: "I feel so lucky to have such an amazing family and group of friends who are giving me buckets of love and have been so strong. During this time, I would be really grateful to have a bit of space and privacy while I get treatment and focus on getting well."
MPs expressed shock and sympathy on social media yesterday.
Labour MP Jacinda Ardern, who is Ms Kaye's rival for the Auckland Central seat, tweeted: "This is gutting news Nikki. Thinking of you and wishing you the speediest recovery."
Cabinet minister Steven Joyce said: "Get well, Nikko. We're all thinking of you."
United Future leader Peter Dunne said: "Terrible news re @nikkikaye. Best wishes to her for a full and speedy recovery."
Justice minister Amy Adams posted: "Nikki has our full support and we're looking forward to welcoming her back soon."
Labour leader Andrew Little said he hoped Ms Kaye made a swift recovery.
"Health is pretty crucial. You only get one chance in life, so we wish her well for addressing her health issue."
Green Party co-leader James Shaw said the cancer diagnosis was "a real personal tragedy for Nikki Kaye and for her family".
The survival rate at five years after a breast cancer diagnosis varies greatly by how early in the course of the disease it was detected - from 99 per cent if it was at the earliest stage, to around 15 per cent if it had advanced to stage four, which is not curable.
Treatment for breast cancer typically involves a combination of surgery, drugs such as chemotherapy, Herceptin and hormone therapy, and radiation therapy.
Breast Cancer Foundation communications manager Adele Gautier said the first treatment for most women diagnosed with breast cancer was surgery, either a mastectomy to remove the full breast or a "lumpectomy" to remove just the tumour and the tissue around it. NZME
