Mr Rudd chose not to take part in the ballot knowing he would suffer an embarrassing defeat to his deputy.

Ms Gillard said she believed "a good government was losing its way" and vowed to revive Labor ahead of a general election expected in October.

The party has suffered a sharp drop in support in opinion polls this year.

A turn-around on a carbon trading scheme and a wrangle over a controversial mining tax led to a sharp slide in approval ratings for Mr Rudd's government.

Ms Gillard, who was deputy prime minister before the surprise Wednesday night challenge to Mr Rudd, stood unopposed at a vote of the Labor Party's 112 members of parliament at a meeting on Thursday morning.

Treasurer Wayne Swan was elected the new deputy leader, also unopposed.

Ms Gillard was born in Barry Island in south Wales, moving to Australia with her family at the age of four.