A move against Kevin Rudd next week is almost certain with Prime Minister Julia Gillard determined to resolve the leadership crisis when parliament resumes.
With the backing of her senior cabinet ministers, Ms Gillard is poised either to sack Mr Rudd from the ministry or hold a leadership ballot to expose his lack of support.
Senior sources stressed that no decision had been made but, said one: "There's movement at the station."
One backer of a ballot said there was a growing feeling that Ms Gillard would take on Mr Rudd in a leadership spill next week and "not only win, but win bloody decisively".
The Sydney Morning Herald revealed today that Ms Gillard was reserving the option of calling a leadership ballot next week but that she will bring it on only from a position of strength to resolve the crisis consuming her government.
A senior source reported that "it is still very much an option to bring it on ... No decision has been made. It's a discussion that needs to be had."
Industry and Climate Change Minister Greg Combet fuelled speculation that the leadership battle needed to come to a head.
Mr Combet told the National Press Club in Canberra that he was "frustrated" that the speculation over a leadership bid by Mr Rudd was continuing.
"Enough is enough. It is time this matter is resolved," he said.
"It is a distraction to the work of government."
He said he was a "strong supporter" of Ms Gillard.
"This issue needs to be resolved and it needs to be resolved in the near future," Mr Combet said.
The way in which it was resolved was "a judgment for the Prime Minister to make".
Another senior Gillard backer said Ms Gillard and Mr Rudd could no longer work together "in any capacity".
"The facts are that Kevin can't stay in cabinet and Julia needs to take him on in front of the caucus," the source said. "If he doesn't throw his hat in, then he will be dumped anyway."
The Gillard camp is confident that it retains the numbers to win convincingly over Mr Rudd in a ballot, with the Foreign Minister thought to have about 30 votes in the 103-strong caucus.
Mr Rudd - who is to deliver a speech in Washington, DC, on Wednesday - said that he was not challenging for the leadership and expected to remain Foreign Minister.
"Can I just say, as I've said many times before, that we have a Prime Minister; I support the Prime Minister; and I intend to remain as Foreign Minister," Mr Rudd said in response to questions about a leadership spill.
Rudd quits: Now for the next episode in his soap opera
Yikes. Kevin Rudd has just quit as Foreign Minister. It is a spectacular escalation of the battle for the leadership which Rudd hopes will achieve two things – enhance his status as a martyr with the voters, and free him up to devote himself fully to the task of wresting back from the prime ministership.
I quit
Tactically, Rudd has sensed Gillard's hesitation about whether to discipline him, to dump him, to bring the issue to a head by calling a spill. She has been reluctant to do any of those things because she knows Rudd is already a figure of considerable sympathy with voters who believe he should not have been knocked off in the first place, and would much prefer him over Gillard as PM.
By sacking himself Rudd is trying to play the victim.
He probably also wanted to get in first, with Gillard's confidantes indicating today that she would move against him next week for disloyalty. He probably also figured that she's knocked him off once and isn't prepared to cop it a second time.
Some of his comments at his press conference just now will invite derision. His claim that the public is sick and tired of this "soap opera" is laughable, given that he has written much of its script with his destabilising tactics, and consistent, coquettish denials of any complicity on the day the leaks emerge.
Many Labor MPs will be celebrating tonight that he has gone from the frontbench. He has obviously not gone away though. He can now be more vocal in his attacks on the performance and the Government and Prime Minister. Whether that wins him the votes he requires in Caucus will be the question in terms of the leadership.
Whether the party can survive any of this blood-letting and avoid a massacre at the next election regardless is a bigger question altogether, for this rolling soap opera is about to have its dramatic sequel when Parliament resumes next week.
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