Australian Prime Minister Julia Gillard is set to see off a leadership challenge from party rival Kevin Rudd on Monday, but she faces a mammoth task to rebuild flagging support for her deeply divided and unpopular minority government.

Gillard called for the leadership vote to stamp her authority over the governing Labor Party after Rudd suddenly quit as foreign minister in Washington last week after weeks of mounting infighting between the two camps.

The leadership vote has exposed deep divisions within the unpopular government, which opinion polls show would lose an election by a landslide. The next elections are due in late 2013.

Gillard has said she has the courage and temperament to drive through reforms and rebuild government support with voters, accusing Rudd of running a chaotic and dysfunctional government before he was dumped in June 2010.

Government lawmakers will meet from 10:00 a.m. local time (2300 GMT) for the secret ballot.

While Rudd doesn't have the support of his parliamentary colleagues, he has consistently polled above Gillard as preferred prime minister, and says he is the only leader capable of turning around the government's poor polling.

Gillard's supporters believe she has more than 65 votes out of Labor's 103 lawmakers, compared with about 30 for Rudd. Only a handful are undecided or undeclared.

Rudd acknowledged he would struggle to win Monday's vote, but said it was important to take a stand and challenge.

I'm resting very calm in my skin this morning, Rudd told Australian television. It's very tough. When you are up against the combined factions of the Labor Party, it is always a focusing experience.

VOTERS PREFER RUDD: POLL

A surprise Rudd win could force an early election as he would need to renegotiate support from independent lawmakers to guarantee a majority in parliament.

That would risk the government's key policies for a carbon tax and a 30 percent tax on coal and iron ore mines, both due to start in July. The opposition has promised to scrap them both.

Financial markets have largely ignored the leadership fight, given only minor policy differences between Gillard and Rudd. Both are committed to return to a small budget surplus by mid 2013.

A Newspoll on Monday showed Labor's primary support had risen to a 12-month high despite the leadership turmoil, with two-party support for the government up two points to 47 percent compared with 53 percent for the opposition, down two points.

Rudd was preferred to Gillard as prime minister by 53 percent to 34 percent.

Both Rudd and Gillard have called for an end to government infighting after the vote and have vowed that the loser should remain in parliament but not challenge again.

But a key Rudd backer, Senator Doug Cameron, said Gillard would now be on notice to either lift the government's standing in the polls, or face a second leadership battle later in the year.

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, Cameron told ABC radio ahead of the vote.

Rudd said he would fully support Gillard as prime minister if he loses the leadership vote.

I can't be more explicit than to say I would not initiate a further challenge against Julia, he said.

(Reporting by James Grubel)