Prime Minister Julia Gillard now faces the mammoth task of rebuilding her shattered Government after convincingly beating predecessor and former Foreign Minister Kevin Rudd in this morning's Labor leadership ballot.
Gillard hammered Rudd 71 votes to 31 votes.
Rudd has been banished to the backbenches, ending both his immediate hopes of returning to the job from which he was deposed by coup in 2010, and his globe-trotting career as Foreign Minister that gave him a constant, high-profile platform.
But the Opposition has signalled the possibility of a no-confidence motion when parliament resumes.
Party returning officer Chris Hayes described the vote as "reasonably" tense", and there was relief when the votes were counted.
He said Rudd would be "working for a reunified Labour team" and "seemed fine" after the vote came out in favour of Gillard.
"I think the Prime Minister has been shown to have the support of caucus," Hayes said.
Hayes' deputy Dick Adams reiterated Gillard now had Rudd's support.
"Kevin said he would be right behind Julia and I believe that is what everyone in the caucus is now expecting."
There had been suggestions that Rudd would foment further trouble in the coming months in the hope of gathering stronger support and staging another challenge later in the year.
But over the weekend he gave an unreserved assurance that he would renounce any fresh claims on the prime ministership and work as a loyal Gillard trooper until the next election.
The scale of his defeat effectively means he has no chance now of a comeback, despite predictions before the ballot by key Left supporter Doug Cameron that if Gillard did not improve her polling another challenge would be made within months.
Gillard will now need to reshuffle her Cabinet, although changes will be minimal as most ministers backed her leadership.
Only five supported Rudd: Anthony Albanese (Transport), Chris Bowen Immigration), Kim Carr (Innovation), Robert McClelland (Emergency Management) and Martin Ferguson (Resources and Energy).
The futures of Carr and McClelland are especially dubious, as Gillard demoted McClelland from Attorney-General in her last reshuffle, and banished Carr to the outer ministry.
Albanese offered his resignation, but Gillard has refused to accept it.
Rudd will be replaced, probably by his predecessor and now Defence Minister Stephen Smith, although high-flying Trade Minister Craig Emerson has also been mentioned.
Rudd has acknowledged the huge damage months of leadership speculation has caused the Government, and said that if Labor did not get it right after the ballot both he and Gillard would be sitting on the Opposition backbenches.
He and Gillard said the party must bury its hatchets and try to restore support in time for the next election in about 18 months' time.
Polls have regularly shown the scale of the problem. The latest Newspoll in The Australian said that despite the Government's woes its primary vote had climbed three points to 35 per cent in the past week, but still ran 10 points behind the Opposition.
The two-party preferred vote that decides Australian elections has also narrowed slightly, but the Opposition has maintained a crushing 53-47 per cent lead.
""We are a great country, but we are being let down by a bad government," Opposition Leader Tony Abbott said.