The Australian Prime Minister Julia Gillard has lost a leadership challenge from within her own party.

She's been beaten by her predecessor Kevin Rudd, who now takes over as Prime Minister.

Opinion polls have been showing dwindling support for the Labor party ahead of elections in three months time. Ms Gillard herself moved to end uncertainty over her job in response to reports that Mr Rudd's supporters were gearing up for a challenge ahead of September elections.

Mr Rudd himself was ousted as Prime Minister by Ms Gillard in 2010. He previously had ruled out a leadership bid unless he was assured of the overwhelming support of his colleagues.

Calling the vote, the Prime Minister had promised to walk away from politics if she lost the challenge.

Kevin Rudd spoke to the media before mounting his challenge for the leadership of the Labor Party.

Ms Gillard said earlier: "I wouldn't be putting myself forward unless I had a degree of confidence about the support of my parliamentary colleagues."

She appeared to express frustration over a petition that reportedly was circulating within the party to call for the leadership ballot.

"Call me old-fashioned, but the way in which these things are normally done is a challenger approaches the leader of the Labor Party and asks them to call a ballot for the leadership, who shake hands and then a ballot is held," she said.

"That hasn't happened but in these circumstances I do think it is in the best interests of the nation and in the best interests of the Labor Party for this matter to be resolved ..."

History

Mr Rudd had been a popular prime minister who started sliding in the polls when Ms Gillard, his then deputy, challenged him to a leadership ballot three years ago.

He did not contest the ballot when he became aware of the level of her support, so she was unopposed when she became the first female prime minister in Australia's history.

Weeks later she led her party to a narrow election victory and formed an unpopular minority government with the support of independents and a legislator from the Greens.

In March, Ms Gillard retained the leadership of the party just hours after she was urged to hold a ballot and Mr Rudd admitted he did not have enough support to defeat her. Mr Rudd also lost a bid for the leadership in 2012.

Fiery

Gillard was perhaps best known on this side of the world for her fiery exchanges in parliament - including this takedown of opposition leader Tony Abbott last year, during which she labels him a misognynist:

Opposition fundraiser

More recently, she was the subject of an international outcry when it emerged that a menu produced for an opposition political fundraiser labelled a quail dish Julia Gillard kentucky Fried Quail - Small Breasts, Huge Thighs & A Big Red Box.