Mr Rees, the 40-year-old water minister who has been in Parliament for nearly 18 months, was elected unanimously by MPs, in an unprecedented move in which both the Premier and Deputy Premier, Carmel Tebbutt, were drafted from Labor's Left faction.

Mr Iemma resigned after his Right faction revolted over his plans to dump the treasurer Michael Costa; the lands minister, Tony Kelly; the health minister, Reba Meagher; the gaming minister, Graham West; and community services minister, Kevin Greene.

He had wanted to replace them with the rising stars Steve Whan, Michael Daley, Tanya Gadiel, Paul McLeay and Jodi McKay.

It makes Mr Iemma the first Labor premier to be rolled by his party in 117 years. He said he would resign from Parliament, triggering a byelection in his seat of Lakemba.

The right-wing powerbrokers Joe Tripodi and Eddie Obeid had earlier warned Mr Iemma that he would not have support for his cabinet overhaul. And when Mr Iemma put the proposal to his faction, Ms Meagher, Mr Kelly and Mr West refused to quit. The right-wingers were prepared to keep supporting Mr Iemma as leader, but not if he dumped the trio.

"They didn't want to do it my way. They can get on without me," Mr Iemma told a news conference.

His successor, Mr Rees, was so little known in July that a Herald online readers' poll found more than half the respondents did not know who he was and 16 per cent thought he was an Australian rules footballer, presumably confusing him with Nathan Buckley.

Mr Rees said he had not made it any secret that that he would nominate for premier if the opportunity came up. His fiancee, Stacey Haines, said: "I'm very happy. I'm very excited. A little bit overwhelmed, but . . . it's all good."

Mr Rees, who worked as a garbage collector to pay his way through university, was an adviser to Mr Iemma when he was health minister and was later chief of staff to an Aboriginal affairs minister, Milton Orkopoulos, who is now in jail for child sex offences.

Mr Rees was a protege of Mr Iemma, who was so desperate to have him in his team at last year's election that he went to Labor's national executive to have Mr Rees preselected for the seat of Toongabbie. Mr Iemma yesterday described Mr Rees as "bright, intelligent and street-smart".

Mr Rees will reveal his cabinet to caucus at 10am tomorrow and would not reveal any details of who would be on his front bench. But he made it clear that Mr Costa, who had already been sacked by Mr Iemma, would not be included.

"There is a caucus meeting over the weekend," Mr Rees said. "There is a process to be followed there. I am not going to speculate or comment on the make-up of the cabinet . . . other than to say Michael Costa will not be returning to the cabinet," Mr Rees said.

He refused to be drawn on Mr Costa's time as treasurer but said Mr Costa had been a "disruptive" force within cabinet.

At an extraordinary press conference early yesterday, Mr Costa outlined the parlous situation of the state's finances, warning of blow-outs in spending in health as tax revenue slumped and a budget shortfall of $2 billion over the coming years.

It is understood that Ms Meagher could survive the cabinet overhaul and Mr Iemma's hopefuls, Mr Daley and Ms Gadiel, could also be promoted to the frontbench, along with Virginia Judge. The Left's David Borger is expected to also secure a cabinet position.

In his final press conference, an emotional Mr Iemma said his colleagues had been loyal, but not yesterday when it came to his choice of a fresh cabinet to renew the Government.

"They said, 'We want you to lead, but not with your team,' " Mr Iemma said.

"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."

Asked if he had a new job lined up, Mr Iemma said: "Yes, husband and father." Asked about Mr Costa's assessment of the NSW economy, Mr Iemma said, "That's Michael, and his style. 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 said he left office without any regrets.

"I always set out to do things honestly, to do my best and to do things that are right," Mr Iemma said.

While Mr Rees came from the Left, he made it clear he would not now be aligned to any faction, and would only attend meetings of the full caucus.