Gillard defeated Kevin Rudd, her former foreign minister, 71 votes to 31 in a ballot of Labour Party lawmakers, ending Rudd's attempt to recapture the job Gillard took from him in an internal party coup in 2010. But she remains unpopular with voters, and unless that changes she could lead Labor to huge losses in elections slated for next year.
Though Rudd said he will not challenge Gillard again, his supporters predicted that party power brokers will simply nominate someone else to do so within months.
"If Julia Gillard wins today and we end up in the same position as we are now, in terms of the polls, in several months' time, then my view is the same people who installed Julia Gillard will be looking for a candidate to replace Julia Gillard," Sen. Doug Cameron, a Rudd supporter, told Australian Broadcasting Corp. before yesterday's vote.
Gillard described her win as "overwhelming" after months of "ugly" infighting within the ranks of the center-left party. She said that if the infighting ends and the party is united, Labor could "absolutely win the next election" against the conservative opposition.
Rudd, who warned during his brief leadership campaign that Gillard would lead Labor to certain defeat next year, called on Labor to unite behind her.
"I bear no one any malice and if I've done wrong to anyone with what I've said and what I've done, I apologize," he told reporters.
Rudd said it was time the "wounds were healed" within the party.
Rudd has never forgiven Gillard since she deposed him as prime minister two years ago. The Labour Party had been in turmoil for months with talk that he would challenge Gillard, and he resigned as foreign minister shortly before she called the leadership vote last week.
Rudd's resignation means Gillard must reshape her Cabinet, and the changes could go well beyond one post. At least five other members of the Cabinet backed Rudd, including Resources Minister Martin Ferguson and Emergency Management Minister Robert McClelland, who both publicly claimed their government was doomed at the next elections under Gillard's leadership.
Gillard declined to comment on the fate of the Cabinet ministers who publicly supported Rudd. After the vote, one of her own supporters, Sen. Mark Arbib, said he would quit as sports minister and as a senator.
Arbib, a party power broker who helped orchestrate Gillard's 2010 coup, said he was resigning in the interest of restoring government unity. An increasing number of lawmakers say the coup was a mistake and blame the continuing turmoil on Arbib.
"I'm resigning because I want to give the party a chance to heal. I want to be able to mend some of the conflict that has happened in the past," he told reporters.
Nick Economou, a Monash University political scientist, said Gillard's leadership was "terminal." He said he expects Rudd or another lawmaker will make a second challenge before elections are due next year.
Australian National University political scientist Michael McKinley said Gillard had six months to lift Labor's and her own standing in the polls.
"If she does not improve in six months, she's going to be very, very sick politically," McKinley said. But he said he thinks Rudd is the only Labor politician who could pose a credible challenge.
Pollster Martin O'Shannessy, chief executive of the respected market researcher Newspoll, said he believes Gillard could improve her standing among voters in time for the next election. He said other governments of other recent prime ministers ended up getting re-elected despite extended periods of high voter dissatisfaction.
"If they think you're a good manager, they'll vote for you even if they don't like you," O'Shannessy said.
Opinion polls show Rudd to be significantly more popular than Gillard among voters, but many lawmakers were dissatisfied with his performance as prime minister, and there were concerns that Labor's fragile ruling coalition could crumble, forcing early elections, if Rudd were to take over.
Rudd vowed that if he lost the ballot, he would stay in politics, which would help Labor preserve its coalition. But he said he would not challenge her leadership again.
Gillard was deputy prime minister two years ago when she made a snap challenge to Rudd's leadership. When Rudd discovered how few lawmakers were prepared to support him at the time, he did not contest the ballot and Gillard became prime minister without a vote.
A Newspoll published on Monday showed most respondents thought Rudd would make a better prime minister than would opposition leader Tony Abbott. Rudd's support stood at 53 percent, 34 percent chose Abbott and 13 percent were undecided.
Respondents were more evenly balanced on a choice between Gillard and Abbott, with Abbott leading 38 percent to 36.
The poll also found Labor trailed Abbott's conservative coalition 47 percent to 53.
The poll was based on an Australia-wide random telephone survey at the weekend of 1,152 voters. It has a 3 percentage point margin of error.
