Health Minister Zweli Mkhize has been placed on special leave to enable him "to attend to allegations and investigations concerning contracts between the Department of Health and a service provider, Digital Vibes", the Presidency said in a statement on Tuesday.
Tourism Minister Mmamoloko Kubayi-Ngubane will act in his place, according to the statement.
Mkhize told journalists, a short while earlier, that he had discussed with President Cyril Ramaphosa the possibility of taking special leave, but added that resignation was not on the table.
The Special Investigating Unit (SIU) is currently investigating the R150 million contract, which an internal probe in the department found was irregularly awarded.
Digital Vibes is run by two of Mkhize's close associates – and the Daily Maverick reported that the company had made payments for repairs to a house owned by a trust in Mkhize's name.
There was also a cash payment from Digital Vibes to his son, Dedani, as well as a car bought in his name.
Mkhize said work had started to recover R37 million of that money, which was found to have been fruitless and wasteful expenditure.
Mkhize also apologised, saying "it has affected me, and my family, and tainted the teamwork of our government led by the president" on the Covid-19 pandemic.
Although he said he had received legal advice not to talk about the details of the matter – and therefore did not attend a meeting of Parliament's portfolio committee on health on Friday – he is set to appear before the ANC's integrity commission soon.
Commission head George Mashamba confirmed he had received a letter from Mkhize, in which he requested an audience with the commission, which meets every Saturday.
ANC deputy secretary-general Jessie Duarte said the party's national working committee, at its meeting on Monday, "welcomed" Mkhize's decision to present himself to the integrity commission.
The party resolved at its 2017 conference at Nasrec that leaders, who are under a cloud, should subject themselves to the commission.