According to a gazette notification, 30 of the 51 members of the cabinet were dropped. The interim government was formed on Monday to conduct general elections due to be held by January 25 next year.
High-profile ministers who lost their status included Foreign Minister Dipu Moni, Home Minister Mahiuddin Khan Alamgir, Civil Aviation Minister Faruq Khan, Telecommunication Minister Sahara Khatun and Health Minister Ruhal Haque.
Two technocrat ministers who were dropped, Shafique Ahmed and Dilip Barua, were made the Prime Minister's advisors.
The development came three days after the interim government headed by Hasina was installed despite a boycott by the Bangladesh Nationalist Party.
The BNP has demanded that polls should be held under a neutral, non-party government. It described the Awami League's actions as a "farce", heightening tensions in the country.
An 18-party alliance led by the BNP has repeatedly rejected Hasina's call to join the multi-party government, saying elections would not be credible under her leadership.
The formation of the multi-party government has pitted the Awami League against the BNP, raising fears of violence ahead of the polls.
Hasina called on the President last night and explained her stance on the multi-party government. The meeting came hours after the cabinet held an emergency meeting.
Violence triggered by the political deadlock has resulted in 30 deaths in recent weeks. More than 70 people were injured and over 500 vehicles torched when the BNP and its fundamentalist ally Jamaat-e-Islami organised violent street protests and enforced a 10-day shutdown in the past three weeks.