Gus O'Donnell, John Major's former press secretary, has been announced as the new permanent secretary to the Treasury.

He will replace Sir Andrew Turnbull next month who moves to become cabinet secretary following Sir Richard Wilson's retirement.

O'Donnell served in Downing Street until 1994, after which he returned to the Treasury as executive director to the IMF and World Bank.

He subsequently moved to become director of macroeconomic policy and finance, and since 1999 has been managing director of macroeconomic policy and international finance - a post which the finance regulation and industry managing director, Jon Cunliffe, will now take over.

"I am delighted and honoured to have been appointed permanent secretary. It is a privilege to be taking over from Sir Andrew Turnbull," he said.

"I look forward to building on his achievements in making the treasury a more professional and diverse department, and in working with other government departments to deliver better public services, a higher sustainable rate of economic growth and rising prosperity and improved employment opportunities for all."

Chancellor Gordon Brown praised his outgoing permanent secretary and welcomed the new appointee.

"Sir Andrew Turnbull is an outstanding public servant and his promotion to Cabinet secretary is well deserved," he said.

"Sir Andrew has played a crucial role over the past four years in helping raise the level of professionalism and expertise in the treasury and strengthening the department's capacity, working alongside other government departments, to push forward public reform."

"I am delighted to welcome Gus O'Donnell, who has been a first-rate managing director of macroeconomic policy and international finance," he added.