Aussie FM resigns in leadership spat

Australian Foreign Minister Kevin Rudd resigned on Wednesday, saying he could no longer work with Prime Minister Julia Gillard, igniting a new and bitter leadership crisis for the struggling minority government.

Gillard's government has sunk in popularity as Gillard and Rudd, whom she ousted in 2010, have waged a personal feud that has split their Labor Party and alienated voters.

Labor insiders said that while Rudd was more popular with voters, Gillard had stronger support within the party and would easily win a leadership vote, which could come as early as next week.

They differ little on policy, but the battle - described by Rudd as a "soap opera" - threatens to trigger an early election and a defeat for Labor's economic reform agenda, including major mining and climate change legislation.

In a dramatic late-night resignation speech from Washington, Rudd said the only honorable course of action was for him to step down, as reports circulated in Australia that Gillard was preparing to sack him.

"The simple truth is that I cannot continue to serve as foreign minister if I don't have Prime Minister Gillard's support," he told reporters.

Australia's Labor government has been torn by speculation about whether Rudd, who Gillard suddenly ousted as a prime minister in mid-2010 but who remains hugely popular with voters, would mount a bid to return to the top job.

Analysts believe Rudd still does not have the votes to topple Gillard in any immediate leadership ballot among the 103-strong Labor caucus, but his move compounds the woes of the unpopular and fragile coalition government.

Gillard has insisted she will lead Labor into the 2013 election and reports, which her office refused to comment on, said that she intended to call a leadership ballot early next week.

In a short written statement she said she was "disappointed that the concerns Mr Rudd has publicly expressed this evening were never personally raised with me, nor did he contact me to discuss his resignation prior to his decision".

But treasurer Wayne Swan released a scathing statement, accusing Rudd of "dysfunctional decision making" and a "deeply demeaning attitude toward other people including our caucus colleagues".

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

Rudd, a globe-trotting diplomat, has abandoned his duties in the US to other officials and leaves Trade Minister Craig Emerson as acting foreign minister. He is expected to arrive in Australia on Friday to plan his next move.