"It is in the public interest for parliaments to be stable and go full term," he said.
But the end of his deal with Gillard puts at risk the Government's controversial plans to means-test tax rebates on private health care spending, and possibly budget measures which Wilkie said he would now consider on their merits.
"Now I am more independent than ever," Wilkie said. "Now I want to have exactly the same relationship both with the Government and the Opposition."
Gillard's survival is back on the razor's edge: any defection, or the loss of a seat in any byelection, would tip the balance. Her hopes of winning an early election forced upon her are dismal. Gillard remains hugely unpopular, and polls indicate Labor would be thrashed.
Last week a Morgan poll found that disapproval of the way she is handling her job had reached a record 54 per cent, and the most recent Newspoll said Labor was trailing the Coalition by 10 points in the two-party preferred vote that decides Australian elections.
Gillard is betting that by dumping Wilkie's controversial pokies regulation, she can push the focus back on to her own agenda as she tries to reshape Labor's dismal political landscape in time for next year's election.
While the loss of Wilkie's guaranteed vote increases her risks, she will help settle a nervous backbench which - especially in marginal seats - was fearful of a backlash against the proposed measures, and help dampen recurring leadership rumours.
Opposition Leader Tony Abbott, who has ruthlessly exploited voter anger over Gillard's knifing of predecessor Kevin Rudd, her dumping of an election pledge not to introduce a carbon tax, has renewed his onslaught.
"She has dudded Andrew Wilkie and all the people who believed in mandatory pre-commitment in the same way she dudded voters over the carbon tax," Abbott said.
Gillard's decision was a purely political calculation.
Wilkie sought legislation requiring all punters to set a limit on the maximum amount they were prepared to lose before they gamble on poker machines, as part of a passionate campaign to reduce the impact of addictive gambling.
But the move is opposed by the Coalition and under heavy fire from the clubs and gambling industry, which targeted the Government and vulnerable Labor MPs in a huge, A$9.5 million ($11.72 million) counter-attack.
Last week Gillard concluded Wilkie did not have the numbers to succeed, and has launched an alternative plan to launch a one-year trial of mandatory pre-commitment in the Australian Capital Territory next year.
All new poker machines must include the relevant technology and electronic warnings from 2013, and withdrawals from club and casino ATMs will be limited to A$250.
The trial was recommended in a Productivity Commission report last year and, while continuing its campaign, Clubs Australia and the Australian Gaming Council have welcomed the move.
"We need to get everybody on the same page," Gillard told Sky TV. "They're not on the same page now and that's what we're working on."
Wilkie indicated that he would vote for the compromise, but reacted bitterly to Gillard's decision: "Frankly, a deal's a deal, and I really do think our democracy is much too precious to trash with broken promises and backroom deals."
The Greens are furious at Gillard's "spineless" action, and will introduce legislation to impose a A$1 bet limit on pokies.
Web-based political group GetUp, a key member of the coalition and staunch anti-gambling advocate, said Gillard's move would cost lives. "One in five suicide patients seen by The Alfred Hospital's emergency department [in Melbourne] is addicted to gambling," national Director Simon Sheikh said. "There's no doubt that today, Clubs Australia has blood on its hands."
