According to a statement released by the government, Mr Mugabe fired Joice Mujuru, 59, and eight other Cabinet ministers aligned with her, accusing them of corruption.
Mrs Mujuru had been tipped as the person most likely to succeed Mr Mugabe until his second wife, Grace, launched a three-month campaign against her and accused her of being too 'dull' and 'corrupt' to lead the party.
Mr Mugabe, 90, has now accused Mrs Mujuru of plotting to assassinate him and branded her 'a witch'.
Experts say the First Lady is now being groomed to succeed her husband, following her appointment as leader of the women's wing of Zanu-PF last week.
Mrs Mugabe, 49, had repeatedly accused Mrs Mujuru of plotting against her husband.
Once working as her husband's secretary, in the last few months she has risen to the position of senior party figure.
Mrs Mujuru's sacking came following weeks of accusations that she had led a 'treacherous cabal' to try to unseat Mugabe, according toAl Jazeera.
The sacked officials received their dismissal letters on Monday night the Reuters news agency has reported.
Mrs Mujuru and her allies were also fired from their senior positions in the ruling party, Zanu-PF, at a meeting last weekend.
A statement issued by the cabinet secretary on behalf of Mr Mugabe said: 'It had become evident that her conduct in the discharge of her duties had become inconsistent with the expected standard, exhibiting conflict between official responsibilities and private interests.'
The president said he would, however, allow them to retain ordinary membership of the party.
Mr Mugabe has also accused Mrs Mujuru of holding secret meetings at the U.S. Embassy in Harare.
Mrs Mujuru has denied the claims, calling them 'ridiculous' in her first public statement, released a day before she was fired.
'I have become the fly in a web of lies whose final objective is the destruction of Zanu-PF,' Mrs Mujuru said in a statement on Tuesday.
'A vociferous attempt has been made to portray me as "a traitor", "murderer" and "sellout", yet no iota of evidence has been produced to give credence to the allegations.'
In her statement Mrs Mujuru said her loyalty to Mr Mugabe was ‘unquestionable’ and it was ‘repugnant’ to suggest she had plotted to kill him or wanted to remove Mr Mugabe from office.
She said Zimbabwe's state media had ‘continued to publish malicious untruths’ about her.
Mujuru has denied the claims, calling them 'ridiculous' in her first public statement.
But correspondents say her career ran into trouble when Mr Mugabe's wife entered politics earlier this year.
Mrs Mujuru, who has been a member of Mr Mugabe's cabinet since he became president in 1980, said no evidence has ever been brought against her.
Mrs Mujuru is the first vice president to be fired since Zimbabwe gained independence in 1980.
Her four predecessors all died in office.
The ministers of energy, education, public service and social welfare, presidential affairs, communication and postal services are among the other members of Cabinet who were fired.
There has not yet been any announcements relating to replacements.
AFP news agency has reported Mrs Mujuru has blamed 'a well-orchestrated smear campaign and gross abuse of state apparatus' that led to the loss of her ruling party post.
She said she was being victimised after exposing infiltrators conspiring to destroy the party, which has ruled the country since independence in 1980.
Zanu-PF held an elective congress last week which endorsed Mugabe as president and his wife as head of the women's wing.
Mrs Mujuru, once a freedom fighter in Mr Mugabe's guerrilla army known by the nom de guerre 'Spill Blood' in the local Shona language, is now considered a political pariah following the allegations.
http://www.dailymail.co.uk/news/article-2867165/Zimbabwe-President-Mugabe-fires-vice-president.html
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