Nathan Rees says he has been endorsed as the new premier of NSW.
Mr Rees has emerged from a Labor caucus meeting at NSW Parliament where he confirmed he had replaced Morris Iemma.
Carmel Tebbutt is his new deputy, he said.
"As you all know Morris Iemma resigned as premier today, I nominated for the vacancy and I was elected unanimously by the full Labor caucus," he told reporters.
"In addition to that, Carmel Tebbutt has the full support of the caucus for the deputy premier position."
"We start work today for the people of NSW, we start work this afternoon to deliver services to the people of NSW," he said.
Mr Rees and Ms Tebbutt left the party room meeting smiling broadly and to the sound of applause from their colleagues.
Iemma quits politics
Morris Iemma says he is quitting politics after resigning as premier of NSW.
In his final speech as a politician, the outgoing premier said he never sought personal glory, perks or a place in the history books.
He told reporters he was resigning as Member for Lakemba and would not sit on the back bench.
"What I've sought was change and growth for NSW," Mr Iemma said.
"My only test was to make the right decisions for NSW and the people in NSW, the right decisions for our kids' future.
"That's why went to the last election promising to secure our water supplies, that's why I attempted reform of the electricity industry, that's why I fought for the north-west metro.
"As a result of those decisions, Sydney will have a guaranteed source of water, making our city resistant to drought, to climate change."
Mr Iemma told reporters he decided to resign because if he'd stayed, he would have had to accept a cabinet not of his choosing.
"I took what I believed would be a package for renewal, reform and refreshment for the party, the cabinet," he said.
"That wasn't accepted, so I tendered my resignation.
"I wasn't going to serve as head of a cabinet that was being foisted on me and I wanted change and that wasn't going to be possible."
Mr Iemma said he would discuss a timeframe for his departure with his successor, Nathan Rees.
Mr Rees won the unanimous support of caucus today when he nominated for the role of premier. Carmel Tebbutt will become his deputy.
Asked about Treasurer Michael Costa's scathing assessment of the NSW economy in a press conference this morning, Mr Iemma said, "That's Michael, and his style."
"But Michael's been a wonderful treasurer, and it was a matter of great personal regret and it was a very difficult time, the last week has been a very difficult time, some very hard decisions had to be made and one of those, perhaps top of the list, was Michael."
Mr Iemma informed Mr Costa last night that he did not want him in the ministry.
"It is a very difficult time for him, I understand that," he said today.
"He's been a wonderful treasurer and I take those remarks (on the economy) as the Michael Costa style."
Mr Costa told reporters this morning he was concerned about the state's ability to retain its Triple A credit rating, with revenues undermined by the slowing economy and the health budget blowing out.
Asked if Mr Costa's assessment was correct, Mr Iemma said, "No."
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