A showdown between Australian Prime Minister Julia Gillard and her ousted predecessor Kevin Rudd appears imminent following the Foreign Minister's sudden resignation in Washington last night.

Mr Rudd's move provided high drama in Canberra, with Treasurer Wayne Swan quickly launching a scathing attack on him.

He said that for too long, Mr Rudd - a former schoolmate - had put his own self-interest ahead of the interests of the Labor movement and the country.

"The party has given Kevin Rudd all the opportunities in the world and he wasted them with his dysfunctional decision making and his deeply demeaning attitude towards other people, including our caucus colleagues."


Mr Swan accused Mr Rudd of undermining the government at every turn.

"He was the party's biggest beneficiary then its biggest critic, but never a loyal or selfless example of its values and objectives."

Mr Swan repeated Environment Minister Tony Burke's view that Ms Gillard had the overwhelming support of the caucus.

Mr Rudd, in his resignation statement, said he believed he no longer had the PM's confidence and that continued speculation about a challenge was damaging both the Government and the nation.

The inevitability of a contest between the two has been accelerating as momentum grew with the weekend's public eruption of the rivalry that has destroyed voter support for both Ms Gillard and her party.

But the PM and Mr Rudd had continued to discount reports that the leadership would be contested in a ballot at a caucus meeting next Tuesday, the day after Parliament resumes.

Tensions between the factions have been mounting since Ms Gillard deposed Mr Rudd in June 2010.

Rudd loyalists were blamed for leaks that almost destroyed Labor's subsequent election campaign, and for damaging tactics since.

Mr Rudd's move is a tectonic shift in Canberra's political landscape.

While not confirming he would challenge for the leadership, he attacked the "faceless men" who had wrecked his prime ministership, referred to their backstabbing, pointed to Ms Gillard's disastrous polling, and said Labor needed to decide who could best beat Opposition Leader Tony Abbott and the Coalition at next year's election.

Mr Rudd said he would now consult his family and community in Queensland before deciding on his future.

He said it was time for "plain speaking" on Ms Gillard's present polling - which displayed similar factors to the situation he faced when he was ousted - and that the manner in which he had been dumped as Prime Minister should not be repeated.

Mr Rudd said the one overriding question for Labor MPs was the person best placed to defeat Mr Abbott. "Tony Abbott is on track to win, and has been for a long time."

- Additional reporting: AAP