JULIA Gillard is still Prime Minister after defeating Kevin Rudd to win Labor's bitter leadership battle.
PRIME Minister Julia Gillard has declared Labor's internal political war is over, after decisively defeating Kevin Rudd in a caucus ballot and accepting the resignation of a factional warlord.
Ms Gillard trounced Mr Rudd 71 votes to 31, racking up the biggest victory in a Labor leadership ballot in 30 years.
The former leader accepted his defeat "without qualification or rancour" and headed to the back bench, saying he would dedicate himself to ensuring Ms Gillard's re-election as prime minister in the 2013 federal election.
"I bear no one any malice and if I've done wrong to anyone with what I've said and what I've done I apologise," he said.
Ms Gillard quickly reasserted her authority to move the government beyond the "ugly" infighting that erupted last week when the prime minister branded Mr Rudd's leadership style as "dysfunctional" and one MP described him as "psychotic".
"Australians have had a gutful of seeing us focus on ourselves," Ms Gillard told reporters in Canberra.
"Today I want to say to Australians one and all, this issue, the leadership question, is now determined.
"I can assure you that this political drama is over."
Assistant Treasurer and NSW senator Mark Arbib - one of the architects of the June 2010 coup that deposed Mr Rudd - shocked the party by announcing he would resign from parliament.
"I'm resigning because I want to give the party a chance to heal," the Right faction powerbroker told reporters.
He stressed his decision was a personal one, that he was not pushed and defended his role in the 2010 leadership change, which has been blamed for some of the current government's woes.
"I believe (the coup) saved the party from certain defeat in 2010," he said.
The prime minister admitted she had failed to properly explain to Australians the reasons for the coup against against Mr Rudd but also said talk about that year should now end.
She also offered her predecessor an olive branch, saying his achievements as prime minister - the apology to the Stolen Generation, guiding Australia through the global financial crisis and his "amazing advocacy" as foreign minister - would be honoured by the party.
Ms Gillard, who shook Mr Rudd's hand in the caucus room after the vote, said she had learned some lessons.
"I intend to be a stronger and more forceful advocate of what we are doing, and what we are achieving for the Australian people," she said, adding the party would now unite ahead of the next election.
"At the end of the day as Labor people we are driven by a common purpose and a common set of values, a common belief in what we want for Australia's future as a stronger and fairer nation."
The prime minister added she was impatient to get on with the job of government.
Mr Rudd told reporters at a media conference attended by his family and staff that the ALP had been through difficult days before.
"My task, as a member of this parliament and a 30-year member of the Australian Labor Party - as its former leader, as its former foreign minister and its former prime minister - is to now throw my every effort in securing Julia Gillard's re-election as Labor prime minister at the next election," he said.
Mr Rudd said he held no grudge against caucus members who had spoken out against him and believed it was "well past time these wounds were healed".
Opposition Leader Tony Abbott said Australians were looking for a new start but did not get it.
"What I think today is likely to be, is not so much a new start for this prime minister but merely a stay of execution," he said.
"The challenge for the prime minister is not just to win the numbers in a caucus ballot ... the challenge for this prime minister is finally to run a competent government."
The prime minister plans to reshuffle her cabinet in coming days, with the resignations of Mr Rudd and Senator Arbib from the ministry offering an opportunity for changes.
However she said she won't be changing government policy, despite Mr Rudd arguing for a review of the carbon tax and asylum seeker policies.
ACTU secretary Jeff Lawrence said it was time for the leadership speculation to end.
"I think if there is any continued leadership speculation and anybody is guilty of not actually getting behind the leadership now, it will be to the detriment of Australian workers," he told reporters in Melbourne.
Senator Arbib's resignation from cabinet will take effect from Friday and his time as a senator will end on Friday week.