Liz Truss told Transport Minister Grant Shapps there was "no room at the inn" when she sacked him - because he hadn't supported her, the ex-minister said.
Mr Shapps was given his marching orders within hours of the under-fire PM taking office last month as she purged Rishi Sunak's backers.
Now as Ms Truss's leadership flounders, the influential Tory says her decision to only appoint allies has come back to bite her.
Mr Shapps told host Matt Forde's Political Party podcast that "direct" Ms Truss said he had been a competent secretary of state and one of the cabinet's best media performers.
But after summoning him to be sacked the MP said the Prime Minister told him: "But you didn't support me, so there's no room at the inn."
As Ms Truss's government descends into chaos just over a month later, Mr Shapps has been tipped as a potential caretaker PM if she is booted out.
The backbencher, who served as party chairman under David Cameron and helped run Boris Johnson's successful leadership campaign, said she faces a massive battle.
"She needs to thread the eye of a needle with the lights off, it's that difficult," Mr Shapps said.
He said that if a leadership race is triggered, it can't go out to members in a nationwide tour again.
"The country needs governing, if the leader needs changing that needs to be decided by MPs, it would take a week," he said - adding that lengthy campaigns should be limited to opposition parties.
Parties in government need to be able to decide on a leader much faster, Mr Shapps urged, with MPs empowered to make the choice.
"I think it's a system that by and large has served the party well, but the problem is when you're in power and while there are huge national issues going on, spending weeks going around the country just doesn't work," he said.
"That's something for the opposition."
Such a move would require a change of Tory Party rules, however.
But he stopped short of calling for a change in leadership.
Asked if the crisis Ms Truss finds herself in is unprecedented, Mr Shapps responded: "It is."
He said that a conversation with a constituent who said she'd have to do extra shifts to afford her mortgage prompted him to break ranks and call for a U-turn on the disastrous mini-budget.
Mr Shapps that the "common sense test" showed it was the wrong time for sweeping tax cuts, and this was why he couldn't support it.
Matt Forde’s fortnightly West End residency continues with upcoming guests including David Dimbleby on 7 th Nov, Matt Hancock on 14 th Nov and Rachel Reeves on 5 th December. Tickets at mattforde.com
