Australian Prime Minister Julia Gillard on Thursday called a ballot on the leadership of the ruling Labor party, bringing to a head an ugly row with predecessor Kevin Rudd.

She said a vote would be held on Monday when parliament resumes after Rudd dramatically quit as foreign minister while in Washington on Wednesday amid reports that she was planning to sack him for undermining the party.

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

Were she to lose, 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 told reporters.

"For far too long we have seen squabbling within the Labor party which has obscured the government's achievements and what we are doing to build a stronger and fairer Australia for the future."

Rudd to make a comeback?

Australia's Labor government has been torn by speculation about whether Rudd, whom Gillard brutally ousted as prime minister in mid-2010 but who remains popular with voters, would mount a bid to return to the top job.

He is yet to formalise his plans but in a clear pitch to caucus members, Rudd on Thursday cited his record as prime minister, declaring the achievements of his government were formidable before boarding a plane back to Australia.

He laid out four key priorities under a government he would lead, including restoring business confidence, maintaining a strong manufacturing industry and continuing health and education reform.

Gillard ‘won’t win’

In a clear signal that he wants his old job back, the 54-year-old said Gillard could not win the next elections due in 2013.

"I do not believe that Prime Minister Gillard can lead the Australian Labor Party to success in the next election," he said, adding that he was encouraged by the support he had received for a return to the top job.

"I am very pleased and encouraged by the amount of positive support encouraging me to contest the leadership of the Labor party," he said.

"I have many more calls to make but their overall argument to me is that they regard me as the best prospect to lead the Australian Labor Party successfully at the next federal elections."

Numbers favour Gillard

On current numbers, Rudd is likely to lose the ballot and be banished to the backbench. His other option is to vacate his seat, which would bring Labor an unwelcome by-election in his Queensland precinct of Griffith.

Local newspapers say around 49 MPs in the 103-member labor caucus are backing Gillard with 37 for Rudd and 17 undecided. A majority is required to win, although these numbers are shifting daily.

Since Rudd's resignation, senior ministers have been lining up to savage him in what is becoming an increasingly bitter and divisive showdown.

Treasurer Wayne Swan, who has cancelled his attendance at the G20 Finance Ministers' meeting in Mexico this weekend to help Gillard, called Rudd a "deeply flawed" man whose weaknesses were not seen in public.

But Rudd does have his backers, notably Senator Doug Cameron who has been vocal in his support. Others reportedly include Immigration Minister Chris Bowen and Transport Minister Anthony Albanese.

"I don't think that Julia Gillard is capable of defeating (opposition leader) Tony Abbott," Cameron told reporters Thursday.

"There are many backbenchers who think that."