Baroness Anelay of St Johns, the chief whip in the Lords, will take up the post of Minister of State at the Foreign Office. She will attend Cabinet.
Communities Secretary Eric Pickles will take over Lady Warsi's cross-departmental responsibilities for faith and communities.
Lord Taylor of Holbeach becomes the new chief whip in the upper chamber while in a further move Lord Bates becomes a junior Home Office minister.
Mr Cameron had been informed Baroness Warsi was standing down only moments before it was announced on social media.
In a letter to her he wrote: "I very much regret that we were not able to speak about your decision beforehand."