Gus Macdonald, 57, is the third businessman to join the government after Lord Simon, the BP chairman, and Lord Sainsbury of Turville, of the supermarket group, both joined the Department of Trade and Industry.
Mr Macdonald, who is chairman of the Scottish Media Group, takes up his job fromDonald Dewar, the Secretary of State for Scotland, who took over the portfolio from Brian Wilson in last week's reshuffle.
Labour backbenchers and opposition MPs claimed the move displayed disarray in the Scottish Office. It would free up Helen Liddell, appointed as a policy co-ordinator in the reshuffle, to do party political work as Labour lagged behind the Scottish National Party in the polls, they suggested.
Raymond Robertson, the Scottish Conservative leader, said the appointment would allow Ms Liddell to become a "full time Labour propagandist on full ministerial pay".
He added: "Mr Dewar clearly has no faith in any of his backbench MPs and has instead had to draft in one of his cronies from the media."
After starting out as a shipyard apprentice, Mr MacDonald went on to control two newspapers and a number of television stations.
Tam Dalyell, Labour MP for Linlithgow, said the appointment smacked of "cronyism". To appoint Mr Macdonald, unelected, as a minister, he said, placed him outside the system of accountability that is "crucial to our democracy".
The SNP leader, Alex Salmond, said the appointment was "a slap in the face" for Labour backbenchers. "The Magic Roundabout of the Scottish Office continues to spin," he said. "We have now had three industry ministers in the space of a week. Businesses must be wondering who will be in charge next week."
Last night Mr Macdonald rejected suggestions that he was one of "Tony's cronies". "I'm not on intimate terms with the Prime Minister," he said. "I think cronyism is the buzz word of the last month or two but I think it starts to lose all meaning if you attach it to this".
However, he added, he had been a Labour party member many years ago and had a long acquaintance with Mr Dewar. "I feel as if I have served a 40- year apprenticeship for this job."
Mr Macdonald will sell his shares and give up public appointments, which include a place on the Board of Scottish Enterprise. He will also waive his ministerial salary.
The Queen has given approval for Mr Macdonald to become a life peer but he will not be able to take up his seat until the autumn.
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