Australian Prime Minister Julia Gillard was poised to win a leadership vote against rival Kevin Rudd on Monday despite polls showing a government under her leadership would be decimated at the next elections due by late 2013.
Gillard said she was confident she would win the prime ministerial showdown against Rudd and hoped the result would end months of bitter leadership infighting within the ruling Labour Party and give the government time to reconnect with voters.
Rudd supporters also acknowledged Gillard was likely to win the leadership vote despite polls showing Labour had a better chance of an election victory under Rudd.
Public indications suggest that Julia Gillard will win, key Rudd backer Resources Minister Martin Ferguson said on Sunday, warning the government faced an election rout and could lose up to 25 seats of its 72 lower house seats under Gillard.
Rudd, who ignited the leadership crisis when he suddenly resigned as foreign minister in Washington on Wednesday, was dumped as prime minister in June 2010 after Gillard led an internal party coup, creating a damaging leadership rivalry.
Gillard went on to win dead heat elections in late 2010, securing a one-seat majority in the 150-seat parliament with support from the Greens and two independents.
A surprise Rudd victory could force an early election if he can't woo independent support, putting at risk the government's carbon tax and 30 percent tax on coal and iron ore mines, both due to start in July this year.
The vote will be held by secret ballot, starting at 10:00 a.m. local time (2300 GMT).
Financial markets have largely ignored the leadership fight, given there are few policy differences between Gillard and Rudd, with both committed to return to a small budget surplus by mid 2013.
But the leadership fight has divided Gillard's ministry, with Attorney-general Nicola Roxon and Schools Minister Peter Garrett saying they would refuse to serve as ministers under Rudd, while Ferguson, Immigration Minister Chris Bowen, and Transport Minister Anthony Albanese support Rudd.
Fierce Rudd critics, Treasurer Wayne Swan and Regional Affairs Minister Simon Crean, would also likely be dumped from the ministry if Rudd wins.
Rudd has support from only around 30 of the 103 Labour lawmakers, despite being more popular with voters, particularly in his home state of Queensland.
A survey of the 20 most threatened Labour MPs by The Age newspaper on Sunday found 15 would back Gillard in the leadership vote and that they would rather lose their seats than return Rudd to the prime ministership.
Gillard on Sunday said she wanted the government to unite following the leadership vote and said she was confident of victory.
I am very confident of the strong support of my colleagues, Gillard told reporters.
The conservative opposition capitalised on the government fighting on Sunday, running a series of television adds depicting both Rudd and Gillard as lemons and saying it would not matter which one was elected leader of a bad government.
Tomorrow will resolve nothing, and we will be left with a seriously bad government, Opposition leader Tony Abbott told reporters.
I think the best option for our country is a change of government, he said, adding there should be an early election.
(Reporting by James Grubel; editing by Ed Lane)