Australia's first female Prime Minister Julia Gillard will quit politics after losing a leadership ballot to the man she deposed as prime minister three years ago.
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Kevin Rudd won the ballot in a special caucus meeting, 57 votes to 45.
Ms Gillard congratulated Mr Rudd and confirmed that she would not recontest her Victorian seat of Lalor in the forthcoming election.
She visited Governor-General Quentin Bryce late on Wednesday night.
"Three years ago I had the very great honour of being elected as Labor leader ... This privilege was truly humbling," she said.
Ms Gillard said she had faced a minority Parliament and internal divisision within Labor during her time as Prime Minister.
"It has not been an easy environment to work in," she said.
Ms Gillard also commented about the fact that she has been Australia's first female prime minister.
She said that the reaction to her being the first woman to serve in the position did not explain everything about her prime ministership. But, she said, "it explains some things".
Ms Gillard said she was proud of her government's achievements, nominating the school funding reforms - which passed the Senate on Wednesday, establishing the Royal Commission on Child Abuse, a price on carbon and the introduction of DisabilityCare as highlights.
Infrastructure Minister Anthony Albanese was elected deputy Labor leader at the special meeting, defeating Simon Crean 61 votes to 38 with three informal votes.
Senior ministers quit
There was no spill for deputy leader however Treasurer Wayne Swan resigned from the position.
Gillard backers Climate Change Minister Greg Combet, Trade Minister Craig Emerson, Communications Minister and Senate leader Stephen Conroy, School Education Minister Peter Garrett and Agriculture Minister Joe Ludwig have also resigned from the front bench.
Mr Emerson and Mr Garrett also announced they will not contest their seats at the electon.
Mr Rudd was elected after Ms Gillard called a ballot in a television interview on Wednesday, following reports first published by Fairfax Media that supporters of Mr Rudd were circulating a caucus petition to allow a challenge for the prime ministership.
It also came after Workplace Minister Bill Shorten made the dramatic announcement, less than 30 minutes before the ballot, that he had swapped his support from Ms Gillard to Mr Rudd.
Mr Shorten - who played a key role in the dumping of Mr Rudd as prime minister in 2010 - has been under sustained pressure in recent weeks to switch his allegiance.
Senator Penny Wong has been voted as Senate leader, following Senator Conroy's resignation.
Rudd praises Gillard's 'strength'
Addressing reporters in Canberra on Wednesday night, Mr Rudd said he resumed his old job with ''humility, with honour, and with an important sense of energy and purpose''.
The new Labor leader praised Ms Gillard as a ''remarkable reformer'', describing her as a woman of great intelligence, strength and energy.
But Mr Rudd said that in recent years politics had failed the Australian people.
''There has just been too much negativity all round,'' he said.
Mr Rudd said he was taking on the challenge of the Labor leadership for a simple reason.
''I simply do not have it in my nature to stand idly by and to allow an Abbott government to come to power in this country by default,'' he said.
Mr Rudd said that his government would work "very closely" with business.
"We have been natural partners in the past, we can be again in the future."
He also had a special word for young people, urging them to re-engage with politics.
"I understand why you have switched off. It is hardly a surprise,” he said. “But I want to ask you to please come back and listen afresh."
Election date
It is unclear whether Mr Rudd will stick to Ms Gillard's schedule of a September 14 election or go earlier. The earliest date Mr Rudd can call an election is August 3.
Coalition MPs met on Thursday night for a special party room meeting.
Opposition Leader Tony Abbott told reporters in Canberra on Wednesday night that what mattered now was to have an election "as soon as possible".
"It's now up to Mr Rudd to say when the election will be," he said.
When asked if he would consider moving a no-confidence motion on Thursday, Mr Abbott replied: "I'm not interested in playing parliamentary games."
Mr Abbott said that "yet again the power brokers of the Labor Party have changed the prime ministership of our country".
"I want to say directly to the people of Australia, you deserve better than this," he said.
Mr Abbott also observed: "Just a couple of simple facts: in 2007, you voted for Kevin and got Julia. In 2010, you voted for Julia and got Kevin. If you vote for the Labor Party in 2013, who knows who you'll end up with."
Mr Rudd is only Labor leader - not prime minister - until the Govenor-General commissions him as such. He is expected to visit Government House on Thursday morning.
Constitutional questions
His election as leader raises constitutional questions, given the Labor minority government.
Earlier on Wednesday, key independent Tony Windsor suggested that he would not support Mr Rudd if he was returned as Labor leader. Other crossbenchers Adam Bandt, Rob Oakeshott and Peter Slipper have not said if they would support a no-confidence vote against Mr Rudd on the floor of the House of Representatives.
However, other independents Craig Thomson, Bob Katter, Andrew Wilkie have indicated they would back Mr Rudd.
In a statement on Wednesday night, Mr Wilkie said he had written to Mr Rudd indicating he would give him "confidence in the House of Representatives in the event that her excellency the Governor-General commissions him as prime minister."
"It's not my business to takes sides in the Labor Party leadership."
On Wednesday night, Greens leader Christine Milne said her party would be watching what happened in the next 24 hours.
"Clearly there will have to be visits to the Governor-General. She will have to make decisions in these circumstances. And we will be observing and considering what happens in the next 24 hours," she said.
