"The CM has decided to make Khan minister in-charge of Meerut again," a senior official told PTI in Lucknow.
Sources said the decision was taken after intervention of SP supremo Mulayam Singh Yadav.
Khan had shot off a letter to the chief minister offering to quit the government, saying Akhilesh could remove him from his cabinet if he was found unfit to be a minister.
"The CM can remove me from his cabinet if he found him unfit to be a minister," Khan, who is also Urban Development and Minority Welfare Minister, said in his letter.
Khan offered to resign from the post of minister in-charge of Ghaziabad and Muzaffarnagar districts, saying if he was unfit to be in-charge of Meerut, he could not be the guardian minister of other districts too.
Khan was the minister in-charge of Ghaziabad, Meerut and Muzaffarnagar and responsible for development projects in these districts.
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Terming as "improper" his removal as minister in-charge of Meerut, Khan told reporters in Delhi that he had written a letter to the Chief Minister but denied he offered to quit.
"How can I say something which I have not done...I am not here to weaken the government. In fact, those leaking such serious communication to the media are trying to weaken the government which has been formed after the misrule of the previous government," he said when asked if he had offered to quit the ministry.
In Kanpur, Akhilesh refuted reports of differences with Khan, saying the SP leader did not have any resentment and blamed the media for "exaggerating" the issue.
"Media is exaggerating the issue. They are over-playing the issue...There are no differences with Khan and he does not hold any resentment," he told reporters.