Chris Finlayson has been appointed by Prime Minister John Key as acting Minister of Labour.
Ms Wilkinson retains her ministerial warrant and other portfolios.
At a press conference this afternoon, Prime Minister John Key emphasized that Ms Wilkinson was not to blame for the Pike River disaster.
"But what is true that over the course of the last 20 years is that the Department of Labour has changed its processes.... and changed the way they have a functioning inspectorate.
"So in the end, while none of her actions make her responsible, the department has to accept its responsibility... and she has done the honourable thing."
He added: "I believe she was a good minister. I have not seen any evidence that she was advised that there was an issue [at Pike River]."
PM apologies for regulatory weakness
Mr Key would not say exactly which of the recommendations made by the Royal Commission Inquiry into the Pike River mine tragedy the Government would act on and which needed more work.
The Royal Commission has made 16 recommendations covering administrative reform, stronger regulation, changes to mining legislation and emergency management.
He said the Government will broadly accept those recommendations and work to implement them as quickly as possible.
"A small number require further investigation before they can be put in place; for example, the recommendation of the establishment of a new Crown entity focused on health and safety.''
Mr Key says the Government accepts there were systemic failures in the regulatory regime across successive governments.
This meant that failures by Pike River Coal were not picked up and remedied as they should have been.
Mr Key apologised to the families of the 29 men who died in the tragedy.
"On behalf of the Government, I apologise to the families, friends and loved ones of the deceased men for the role this lack of regulatory effectiveness played in the tragedy.
"I speak on behalf of the Government when I say I regret deeply what has happened, in terms of the lives lost and suffering caused.
"The Royal Commission made it very clear that much of the fault for the tragedy lies with Pike River Coal Ltd. Because it did not follow good management and best practice principles, its health and safety systems were inadequate.''
Mr Key has pointed to successive governments for the weaknesses in mining regulation.
"The Royal Commission also says the regulatory environment was not effective over a long period of time.''
