Australian Prime Minister Julia Gillard has called a ballot on the leadership of the ruling Labor party, bringing to a head an increasingly bitter row with predecessor Kevin Rudd.

Ms Gillard said a vote would be held on Monday when parliament resumes.

Mr Rudd dramatically quit as foreign minister while in Washington yesterday, amid reports she was planning to sack him for undermining the party.

"Australians are rightly sick of this and they want it brought to an end," Ms Gillard told reporters of a battle for power that has been variously described by ministers as a "farce", "soap opera" and a "comedy".

Ms Gillard said she would again stand, and were she to lose would retire to the backbench and renounce future claims to the leadership. She called on Mr Rudd to do the same.

"For far too long we have seen squabbling within the Labor party, which has obscured the government's achievements and what we are doing to build a stronger and fairer Australia for the future," she said.

Australia's government has been torn by speculation about whether Mr Rudd, whom Ms Gillard ousted as prime minister in mid-2010, but who remains popular with voters, would mount a bid to return to his former job.

He is yet to formalise his plans but had laid out four key priorities under a government he would lead - including restoring business confidence, maintaining a strong manufacturing industry and continuing health and education reform.

In a broad hint that he wants his old job back, the 54-year-old said Ms Gillard could not win the next elections due in 2013.

He said: "I do not believe that Prime Minister Gillard can lead the Australian Labor Party to success in the next election."

"I have many more calls to make but their overall argument to me is that they regard me as the best prospect to lead the Australian Labor Party successfully at the next federal elections," he added.