Mr Nash was on his final warning after a string of scandals, but Prime Minister Chris Hipkins said the most recent offence was "inexcusable" and the incident alone would have resulted in Mr Nash being sacked.
The call was "black and white", but he was still "gutted" to see Mr Nash go, he said.
Mr Hipkins suggested Mr Nash might not contest the seat of Napier at the 2023 election and confirmed he had asked Mr Nash to reflect on his position.
"I will leave him to make further comment on that," he said.
Were Mr Nash to leave Parliament after mid-April, he would be able to depart Parliament without triggering a by-election.
Asked whether Mr Nash could even leave Labour’s caucus, Mr Hipkins said that was not something he was "in a position to make any comments on".
"I imagine there will be further conversations.
"Stuart will himself be reflecting on his position," he said.
The new scandal relates to a pandemic-era commercial rent relief package.
In the leaked email to Troy Bowker and Greg Loveridge, Mr Nash wrote: "I am as annoyed (and surprised) about the final outcome of the ‘commercial rent relief package’ as you are".
Both men, who Mr Hipkins said had done nothing wrong, were involved in the property industry.
"That crosses a line that is totally unacceptable to me," Mr Hipkins said.
The email detailed Cabinet discussions and noted Mr Nash’s personal disagreements with Cabinet colleagues and the positions they took.
The Cabinet Manual, which governs the conduct of Cabinet ministers, states "discussion at Cabinet and Cabinet committee meetings is informal and confidential" and members of the Cabinet are bound by collective responsibility and must not detail who took what position on an issue.
Mr Bowker gave $10,000 to Mr Nash for the 2020 campaign and Mr Loveridge gave $5000 through a company, GRL Holdings.
Mr Nash had already had to distance himself from Mr Bowker after a 2021 incident in which the latter accused Dunedin entrepreneur Sir Ian Taylor of "sucking up to the left Maori-loving agenda".
Back then, Mr Nash said he would not be "taking any more donations from Troy".
National leader Christopher Luxon called on Mr Nash to resign from Parliament immediately.
He said Mr Nash’s actions were "akin to insider trading".
"He needs to leave Parliament tonight," Mr Luxon said.
Act New Zealand leader David Seymour said Mr Hipkins was paying the price for "having low ministerial standards and being unable to sack ministers, just like Jacinda Ardern".
Dr Megan Woods will become Acting Minister for Economic Development and Acting Minister of Forestry, and David Parker will be Acting Minister for Oceans and Fisheries.
Meka Whaitiri will lead the Hawke’s Bay cyclone response on an acting basis.
By Thomas Coughlan
