Prime Minister Julia Gillard said she will hold a party ballot at 10am Monday to settle the leadership turmoil which has destabilised the Australian Government.
In a press conference in Adelaide, Ms Gillard said if she losses the leadership contest she will retire to the backbench and renounce any claim to the leadership, asking her likely rival Kevin Rudd to do the same.
‘‘Australians are rightly sick of this,’’ she said.
Reaction to Ms Gillard’s announcement has been swift.
Opposition leader Tony Abbott has held a press conference where he said the Australian people ‘‘deserve a better prime minister’’.
Throsby MP pledges support for GillardWould Rudd make a better PM? Vote in our poll. Rudd outlines policy before flight homeOpinion: Rudd's resignation exposes deeper issues for the Government and Gillard‘‘I say to the Australian people: ‘Do not lose heart, we can have a better government, we are better than this’,’’ he said.
‘‘What the Australian people yearn for right now is a prime minister that they choose, not a prime minister that the faceless people choose.’’
This morning Treasurer Wayne Swan renewed his attacks on Mr Rudd calling him, ‘‘increasingly erratic’’.
"I watched his words from Washington last night. The fact is he has been deliberately behind the scenes undermining the important work of the government," he said.
He joins a number of ministers who have publically backed the Prime Minister, including Simon Crean, Craig Emerson, Tanya Plibersek, Nicola Roxon and Stephen Conroy.
Rudd supporter, Senator Kim Carr, defended the former Prime Minister and, claiming he had been victim to a "campaign of vilification''.
''We need decent rules of engagement because we all have to live together with each other after this event. I won't be in the business of making ads for the Liberal Party,'' he said.
Former Queensland premier Peter Beattie also entered the fray, stating that rank and file Labor members had had a ‘‘gutful’’ of leadership instability.
He said if Mr Rudd loses Monday’s ballot he should renounce the leadership.
‘‘If Kevin loses on Monday and continues to do it his popularity will disappear up his own bum...That will happen because Australians are sick of it too,’’ he said.
"The goodwill Kevin has had will disappear if he loses and doesn’t walk away."
Ms Gillard's announcement was quickly followed by Cunningham MP Sharon Bird declaring her support for Ms Gillard.
In a short statement Ms Bird said Ms Gillard "has always had, and continues to receive, my total support."
“For the good of the Government and the community we represent, the leadership issue must be resolved on Monday”, she said.
Meanwhile, the world’s diplomatic community has begun lamenting the loss of Mr Rudd as foreign minister.
Canadian Foreign Minister John Baird, speaking to the National Times, described Mr Rudd as ‘‘highly regarded’’ by colleagues.
‘‘He is... always one of the smartest people, well prepared around the table,’’ he said.
During this morning's press conference Ms Gillard said there had been a long-running destabilisation campaign against her.
"I like to think the best of people. We now see there has been a concerted campaign here and we need to end it, and the way to end it is through a ballot."
Ms Gillard said the ongoing speculation about leadership was proving a distraction from Government and the matter needed to be settled "once and for all".
She said initiatives under her time like carbon tax displayed her determination, stating that her record shows she is "calm under pressure."
She also answered questions about why she toppled Kevin Rudd when he was still Prime Minister in the leadership spill of 2010.
Ms Gillard said she felt the 2010 election was sabotaged.
"We went into that election in politically very very difficult circumstances. If people look at the opinion polls for 2010, we were in a winning position until the sabotage - that knocked that campaign very soundly," she said.
Ms Gillard appealed to her parliamentary colleagues to support her, but said she was assured of their support.
She challenged Mr Rudd to return to the back bench and renounce any leadership ambitions during the next term, if he losses the ballot on Monday. The move seems aimed at minimising Rudd's potentially disruptive presence on the back bench should he lose Monday's ballot, and prevent a second leadership challenge.
Mr Rudd announced his shock resignation yesterday afternoon.
Ms Gillard was caught off guard by the sudden resignation and subsequent attack from Mr Rudd who made his announcement in Washington, DC. She said she was not consulted about Mr Rudd’s decision nor was aware of the content of his press conference.