The weekend's leaking of a tape showing Rudd swearing in frustration over a message to the Chinese community during his time as Prime Minister, and the public explosion by rival supporters, leaves no choice.
Constant leadership speculation is overpowering Gillard's political agenda and threatening real harm to the nation by diverting attention and energies away from the economy and other crucial areas.
Gillard supporters have urged the Prime Minister to sack Rudd or call an early ballot. But she has given no public indication that she is preparing to do either.
Sacking Rudd is not a real option, certainly not while he is representing the nation abroad. If he was later to be dumped from the ministry he would cast a deep and divisive shadow from the backbenches.
Rudd was widely blamed for the leaks that hammered Gillard's election campaign and further eroded support for a Government that now survives by a single vote.
Gillard's available trigger for sacking Rudd for disloyalty has also been blunted by Tasmanian Independent Andrew Wilkie who had earlier said Rudd had late last year indicated that he wanted a challenge.
Wilkie said yesterday that he had raised the leadership issue, not Rudd, and that Rudd had discussed the issue only in general terms and without criticising Gillard.
If Rudd does not openly challenge Gillard and continues his evasive response to leadership queries, the Government will never really be able to get on with its job of restoring support in time for next year's election.
The only real way of avoiding a clash is for Rudd to openly, firmly and repeatedly pronounce his unwavering support for Gillard, which he has not been prepared to do.
Gillard has little option now but to take Rudd on, crush him completely in a Caucus vote that leaves no chance of further mischief, and move on to a reform agenda that has so far been impressively successful - but almost equally invisible because of constant speculation and undermining.
Whether that is possible is another question.
Rudd, meanwhile, has been playing a careful game, avoiding any public dissent or show of ambition but building on his early popularity as Prime Minister and huge public sympathy for the way in which he was knifed.
Polls consistently show him as the preferred Labor leader. His return would be especially popular in his home state of Queensland where voters took his dismissal as an affront to the state and where the state Labor Government is about to be crushed in next month's election.
With the potential for at least partially restoring Labor's shredded federal vote in a key state, and a broader national popularity, Rudd's supporters argue that his return would substantially improve the Government's prospects of survival.
Rudd has also avoided showing himself as a plotter, and has instead let others do the running so he can be seen as drafted in rather than actively seeking a contest.
But he has been grooming his image: campaigning for Premier Anna Bligh in Queensland, appearing in disasters and at public events with a relaxed informality Gillard cannot match, and striding a very large world stage.
Rudd is also presenting himself as a changed man, learning from bitter criticism of his autocratic management style and promising more patience, more consultation, and more delegation.
Rudd supporters are saying that Gillard will have to call the shots for any challenge, and, with numbers very uncertain at present, would probably prefer to allow momentum to build for a little longer yet.
But the issue is gaining a momentum of its own.
Regional Development Minister and former Labor leader Simon Crean, an outspoken Gillard supporter, has accused Rudd of disloyalty and said yesterday that if he did not become part of the team he should quit, or challenge.
Crean said that Gillard should make this clear in a frank discussion with Rudd.
On the sidelines, the Opposition is reaping the benefits and calling for an election that polls show it would win by a landslide.
"What we need is a government that is getting on with the job, not a government that is cannibalising itself," Opposition Leader Tony Abbott said.
