Lord Ryder, who was chief whip under John Major between 1990 and 1995, will work alongside Davies and BBC director general Greg Dyke.
Dyke and Davies are both former Labour supporters and donors, and Lord Ryder's appointment is expected to go some way to allay criticisms that the BBC could not remain impartial when run by Labour supporters.
After Davies' appointment, it was assumed that the post of vice-chairman would go to a Conservative supporter. Downing Street invited the Conservative leader Iain Duncan Smith to nominate a candidate for the role, but he refused because he felt the BBC was becoming top heavy with "Labour cronies".
Several Tory party members have been linked with the role, including Virginia Bottomley, Michael Portillo and Baroness Hogg.
Ryder was selected for the post by an independent panel under the Nolan rules, which were designed to guarantee openness and honesty in the government of the BBC, in the same way that Davies was selected.
Previously, the job had been decided by the government and the successful candidate would have received a phone call from Downing Street offering him or her the job. This ensured that, during the Tories' reign, the chairmen were traditionally Conservative supporters.
Lord Ryder is a former MP for Mid-Norfolk but quit in 1997 to pursue a career in the City. He was political secretary to Margaret Thatcher when she was leader of the opposition.
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