North Korea's military chief of staff Ri Yong-Ho is seen in Pyongyang in April 2012.
Ri Yong-Ho is regarded as one of the key figures who has helped support the young, untested leader in the transition following the death in December of his father Kim Jong-Il, the longtime dictator of the reclusive state.
Ri, 69, who became head of the army in 2009 with the official title Chief of the General Staff of the Korean People's Army, has often been seen accompanying Jong-Un on visits to military bases in recent months.
The North's official KCNA news agency said a meeting of top officials from the ruling party on Sunday took the decision to relieve him of his posts.
"A meeting of the political bureau of the central committee of the workers' party decided to relieve Ri Yong-ho of all his posts for his illness," it said.
He was removed from the "presidium of the politburo", the country's most powerful body, which only has a handful of members, the agency said.
And he will no longer serve as "vice-chairman of the central military commission" of the Workers' Party of Korea, the North's ruling party, it added.
The general was one of seven top party and military cadres who accompanied Jong-Un when he walked alongside the hearse carrying the body of Jong-Il during his funeral.
The seven -- including Jong-Un's powerful uncle Jang Song-Thaek -- were considered central figures in bolstering the regime of the new leader, who is believed to be in his late 20s.
Ri was also seen accompanying Jong-Un recently as the leader paid tribute in a ceremony in Pyongyang to his late grandfather Kim Il-Sung on the anniversary of his death in 1994.
Professor Yang Moo-Jin, of the University of North Korean Studies in Seoul, said he was sceptical about the reason given for the "hawkish" veteran field commander's departure.
He said the North seldom relieved party or military leaders simply for health reasons.
"He might have fallen into disfavor with Kim Jong-Un or lost in a power struggle with other military leaders," he said.
"His removal from posts is likely to speed up generational changes in the military. This is a message that the principle of the party reigning over the military will further strengthen."
The North's military has in recent months ratcheted up hostile rhetoric towards South Korea and President Lee Myung-Bak partly in a bid to burnish its new leader's credentials.
The North last month denounced US-South Korean drills near the tense border as a "provocation" and vowed to "further bolster up its nuclear deterrent", state media reported.
Some 2,000 South Korean and US troops along with jet fighters, tanks and attack helicopters took part in the live-fire exercises to test responses to any North Korean attack.
It was the latest sign of high tensions after the North's failed rocket launch in April, seen by the United States and its allies as an attempted ballistic missile test.
The North has been developing nuclear weapons for decades. Its official position has been that it needs them for self-defence against a US nuclear threat, but that it is willing in principle to scrap the atomic weaponry.
Under a September 2005 deal reached during six-nation negotiations, Pyongyang agreed to dismantle its nuclear programmes in return for economic and diplomatic benefits and security guarantees.
But six-party talks on implementing the deal have been stalled since December 2008. The North has staged two nuclear tests, in 2006 and 2009.