Julia Gillard prepares for battle

Last updated 00:00 25/06/2010

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Julia Gillard has vowed to "fight with every ounce of my being" to take Labor to victory at the next election from her historic position as Australia's first female prime minister.

She will go to the polls "within months" after Kevin Rudd stepped aside on Thursday morning, handing her the leadership unopposed after an unprecedented 24 hours in Australian politics.

And, in another shock development, Finance Minister Lindsay Tanner signalled on Thursday he would stand aside at the next election to spend more time with his family.

"There are, frankly, two little girls and two older kids who need me more than the country needs me," he told parliament.

His decision means that the Australian Greens are now a good chance to win his seat of Melbourne, where their candidate Adam Bandt nearly pushed out Mr Tanner in 2007.

The announcement stunned parliament that was still reeling from the events of the morning.

In one swift move, Labor had made a woman prime minister and felled her once popular predecessor before he got a chance to try to win a second term of government.

After months of denying leadership ambitions, Ms Gillard told reporters she had decided finally to put up her hand for the job because a "good government was losing its way".

"It was necessary for me to take this step to take control and to ensure that the government got back on track," she said.

Ms Gillard took her share of responsibility for the Rudd government's failures.

"I know the Rudd government did not do all it said it would do, and at times it went off track," she said.

Mr Rudd on Thursday morning gave in to the undeniable fact he had been abandoned by the majority of his party - stepping down from the leadership - after signalling just hours earlier he would fight for his political life.

In his final press conference, a tearful Mr Rudd, flanked by his wife Therese Rein and three children, gave an emotional run-down of his achievements in government.

Displaying an eloquence that often deserted him as leader, he paid a moving and at times funny homage to his family, staff and the Labor Party.

He praised Ms Gillard and promised to work for the re-election of the government.

"It is a good government with a good program and it deserves re-election," he said.

Against expectations, Mr Rudd has decided to stay in parliament and recontest his seat of Griffith in Brisbane at the next election.

Ms Gillard will have talks with her former boss about his future but speculation is mounting he will be given the job of foreign minister, where he could indulge his passion for international affairs.

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Mr Tanner's decision will also open up opportunities to move people around.

Treasurer Wayne Swan will become deputy Labor leader and one of his first duties will be to represent Australia at the G20 leaders' meeting in Toronto.

Just after 1pm, in an historic first for the nation, Governor-General Quentin Bryce swore Ms Gillard in as Australia's 27th prime minister and the first female in the job.

But Opposition Leader Tony Abbott focussed on Mr Rudd, coming out swinging against his "ugly assassination".

"A midnight knock on the door is no way for an Australian prime minister to be treated," he told parliament.

Ms Gillard would only offer more of the same as the Rudd government.

"They've changed the salesman but they haven't changed the product," Mr Abbott said.

In one of her first moves as leader, Ms Gillard vowed to cancel the taxpayer-funded advertisements targeting the mining industry and opened her door to the sector to discuss its problems with the resource super profits tax.

But she wouldn't say whether this concession meant her government was willing to budge on the 40 per cent rate of the tax.

She promised to prosecute the case for a carbon price "at home and abroad" but gave no clear indication if the timeframe would be any earlier than that proposed by Mr Rudd after an emissions trading scheme was shelved.

His decision to back away from the issue he described as the "greatest moral challenge of our time" was in many ways the beginning of the end for Mr Rudd.

- AAP

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