The Greek prime minister, Alexis Tsipras, has been forced into an emergency cabinet reshuffle following the resignation of two ministers over housing benefit claims that have embarrassed Athens’ leftist-led coalition. The new lineup was announced on Wednesday as a new round of compliance talks between the debt-stricken country and bailout creditors got under way.

The government spokesman said the deputy prime minister, Yannis Dragasakis, would assume the key portfolio of economy and development minister, while Dimitris Vitsas would replace Yiannis Mouzalas as migration minister. Both are sensitive posts in a county that has battled bankruptcy and the European refugee crisis.

In a surprise move, the Syriza party leader also brought the former leader of the Democratic Left party, Fotis Kouvelis, into government, giving him Vitsas’s post as deputy defence minister.

The reshuffle was triggered by the resignation on Monday of the economy minister Dimitris Papadimitriou after his wife, the alternate labour minister, Rania Antonopoulou, had also quit earlier that day. Antonopoulou gave her notice after it was revealed that she had accepted €23,000 in housing benefits at a time of immense hardship for Greeks.

The pair, both prominent academics in the US, where they have a permanent home, had been described as one of the wealthiest couples in politics, with combined multimillion-dollar assets.

In a contrite statement, Antonopoulou – who had taken leave of absence from the New York-based Levy economics institute to oversee policies of social solidarity – said she would return the stipend to the state.

“It was never my intention to insult the Greek people,” said the statement. “I understand that my financial standing, as reflected in my tax declaration, has increased public outrage.”

Tsipras has sought to play down the row. He indirectly praised the couple, in a speech late on Tuesday, for the “sensibility” they had exhibited in stepping down.

The benefits row paled next to the corruption and criminal wrongdoing of previous administrations that had contributed to Greece’s near-financial collapse, he said, repeating claims that the Greek health system had lost €23bn as a result of inflated contracts in the pharmacy sector.

The country has been rocked in recent weeks by allegations of industrial-scale bribery involving the Swiss drug maker, Novartis, and 10 top Greek politicians, including two former prime ministers and the current governor of the bank of Greece.

But Papadimitriou’s departure comes at an especially sensitive time. After eight years of international surveillance, debt-stricken Athens hopes to end its bailout era in August when its third, EU-sponsored bailout programme expires.

Negotiations on a fourth compliance review of “reforms for rescue funds” officially began this week with bailout inspectors representing the EU and International Monetary Fund.

Papadimitriou, in charge of promoting Greece to foreign investors, was to play a pivotal role in the talks. The 72-year-old American academic, who had given up his post as provost of Bard college to join the leftist government, had been widely praised by auditors.

Although Antonopoulou had struggled at times to adapt to Greece – preferring to give conference speeches in English, a language she felt more comfortable in – she, too, won plaudits.

Legislation introducing rent subsidies for politicians without permanent homes in Athens had been voted in at the height of the crisis as parliament also legislated pension cuts, tax rises and other cutbacks to keep Greece in the eurozone.

“Ultimately, this boils down to a cultural misunderstanding,” said one well-placed insider. “Neither were professional politicians and neither recognised the significance of making symbolic moves to attain political legitimacy. It has burnt them and it has burnt the government.”