en Wallace has officially resigned leaving the Prime Minister to appoint a new defence secretary later on Thursday.
Energy secretary Grant Shapps was being tipped to take on the role.
Mr Wallace announced last month that he would be leaving the senior Cabinet job at the next reshuffle, bringing to an end his four years in the job.
In a letter to Rishi Sunak on Thursday morning, he said: “As I finish my tenure, I can reflect that the Ministry of Defence that I leave is now more modern, better funded and more confident than the organisation I took over in 2019. As well as being active around the world we have also invested in prosperity at home.
“The United Kingdom is respected around the world for our Armed Forces and that respect has only grown more since the war in Ukraine.
“I know you agree with me that we must not return to the days where Defence was viewed as a discretionary spend by Government and savings were achieved by hollowing out.”
He added that his dedication to the armed forces had come at a “personal toll to me and my family”.
“After much reflection, I have taken the decision to ask that I be allowed to step down,” he said. “I won my seat in 2005 and after so many years it is time for me to invest in the parts of life that I have neglected, and to explore new opportunities.”
The PM said Mr Sunak has served his country with “distinction”.
Mr Sunak added: “You have been a vigorous advocate for the defence of the realm.”
Mr Shapps was the surprise frontrunner for the job on Thursday morning.
He visited Ukraine last week and tweeted: “What I saw in Kyiv this week was a people resolute in their defiance against Putin’s tyranny and Russia’s aggression.”
Armed Forces Minister James Heappey and Chief Secretary to the TreasuryJohn Glen have also both been linked with the role.
Former defence secretary Liam Fox is a possibility, the Telegraph reported.
Dr Fox, who served in the role under prime minister David Cameron between 2010 and 2011, was forced to resign after allowing his friend and best man Adam Werritty to take on an unofficial and undeclared role as his adviser.
The senior Tory MP backed Mr Sunak in last summer’s Conservative leadership race.
Mr Wallace, who served under three prime ministers in his current role, played a key part in the UK’s response to Russia’s invasion of Ukraine and was a close ally of Boris Johnson.
Popular among Tory members, he was at one time seen as a potential leadership contender.
He ruled himself out of the running for the Conservative leadership last year despite being an early frontrunner in the race to replace Mr Johnson.
His successor will take on the high-profile role as the war in Ukraine continues.
A Labour source said: “The outgoing defence secretary has shown real leadership in supporting Ukraine from the start and Labour will continue to stand shoulder to shoulder with the government in support of the people of Ukraine until the war against Russia is won.
“We have to stay the course and see this through. While Ben Wallace deserves credit for his support of Ukraine’s armed forces, his record on British armed forces has been poor, with cuts and procurement failures the order of the day. The new defence secretary needs to get a grip, boost British forces and give them the resources, kit and accommodation they deserve.”