Amber Rudd has returned to the cabinet as work and pensions secretary.
Ms Rudd, who replaces Esther McVey following her Brexit resignation, quit herself as home secretary in April amid controversy over her handling of the Windrush controversy.
She admitted having "inadvertently misled" MPs over immigration targets but a subsequent probe found she had been let down by officials.
But her appointment was met with outrage from Labour.
The party's shadow cabinet office minister Jon Trickett said: "After enforcing Theresa May's hostile environment in the Home Office, Amber Rudd will now be in charge of the DWP's hostile environment for disabled people and the poorest in society.
"With universal credit in absolute shambles, appointing a disgraced former minister who was only recently forced to resign for her role in another scandal is a desperate choice by a weak prime minister."
Ms Rudd said she had seen universal credit "transform lives" in her Hastings and Rye constituency but she "recognised there had been some issues with it".
She said she would make it her role to to "iron out those difficulties and make it a force wholly for good".
Labour MP David Lammy said her appointment so soon after the Windrush row was "wrong".
Rudd made inexcusable errors over Windrush. It is wrong that she has been given a new job before any victims have had compensation. She will be the sixth DWP secretary since March 2016. This is a poisoned chalice in a government that is unlikely to survive until Christmas. https://t.co/XrlGaB0hCS— David Lammy (@DavidLammy) November 16, 2018
The BBC's Iain Watson said it was a huge job given the controversy surrounding universal credit, the government's flagship welfare reform.
He also said it showed Theresa May's confidence that she could appoint one of her "allies" to such a key role given the turmoil over her leadership in the past 24 hours.
Ms Rudd's return to government comes less than seven months after she faced intense criticism over the UK's treatment of the Windrush generation.
She apologised after it emerged that some migrants from Commonwealth countries, who were encouraged to settle in the UK from the late 1940s to 1973, were being wrongly declared illegal immigrants.
New Work and Pensions Secretary Amber Rudd says she's "confident" Theresa May can survive, and ask MPs who've lost confidence in the PM to "think again"— BBC Politics (@BBCPolitics) November 16, 2018
Latest: https://t.co/bsQnwytxNH pic.twitter.com/HU4CBw0KVo
However, she continued to defend the hostile environment immigration policy championed by Mrs May and quit after admitting to having inadvertently misled two parliamentary committees on what she knew about targets for immigration removals.
A recent report found Home Office officials gave her the wrong information and then later failed to clear up the problem.
Ms Rudd becomes the sixth work and pensions secretary since March 2016.
A Remain supporter during the 2016 referendum, Ms Rudd has given her backing to Mrs May's draft Brexit agreement, saying it is "not perfect but perfect was never on offer".
Her return to the ministerial ranks has been welcomed by colleagues, including Sajid Javid and Liz Truss.
The prime minister has also announced that Health Minister Stephen Barclay will replace Dominic Raab as Brexit Secretary, Environment Secretary Michael Gove having reportedly turned down the job on Thursday.