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Australian Prime Minister Julia Gillard on Thursday announced a ballot for the Labor leadership and called on ex-leader Kevin Rudd, widely expected to challenge, to accept its outcome as final.

"I have decided that at 10:00am (2300 GMT Sunday) Monday morning a ballot for the Labor leadership will be conducted," Gillard told reporters, adding that she would again stand for the job and expected the full support of her Labor colleagues.

Were she to, against expectations, lose the ballot, Gillard said she would retire to the backbench and renounce any future claims to the leadership and called on Rudd to do the same.

"Australians are rightly sick of this and they want it brought to an end," Gillard said.

Rudd was ousted as prime minister in a shock party-room coup in June 2010 as his popularity tanked in the polls due to an unpopular mining profits tax and his inability to pass pollution reduction laws.

Then his deputy, Gillard challenged Rudd and went on to take the prime ministership unopposed.

She enjoyed a brief honeymoon in the polls but her popularity waned after a disastrous election campaign and her decision to introduce a tax on carbon emissions despite earlier promising she would do no such thing.

Leadership tensions between Gillard and Rudd reached fever pitch this week, prompting Rudd to resign his post as foreign minister at a dramatic early morning press conference in Washington.

Rudd said earlier Thursday that Gillard could not win the next election and he would return to Australia to make an announcement on his intentions.

AFP