Australia's former foreign minister Kevin Rudd has announced that he will challenge prime minister Julia Gillard for leadership of their Labour party and the country.

Ms Gillard is planning a leadership ballot for Monday.

The vote by party parliamentarians is an effort by Ms Gillard to stop a power struggle that has been brewing for weeks.

Mr Rudd resigned as foreign minister during a trip to the US earlier this week.

Mr Rudd announced his intentions to challenge Ms Gillard in a speech today.

Ms Gillard ousted Mr Rudd as prime minister in June 2010 in an internal party coup, and their centre-left Labour Party scraped through elections later that year to lead a minority government.

"It's no secret that our government has a lot of work to do if it is to regain the confidence of the Australian people," Mr Rudd said.

"Starting on Monday, I'm going to start restoring that trust."

Mr Rudd resigned as foreign minister during a trip to the US earlier this week, saying he could not continue in his role without the support of the prime minister.

"I want to finish the job the Australian people elected me to do when I was elected by them to become prime minister," he said today.

The government could fall if Mr Rudd wins because Labour's single-seat majority in the House of Representatives depends on a coalition with two independent politicians and one from the Greens Party.

Early elections would be held if neither Labour nor the conservative opposition coalition can muster a majority.

Ms Gillard has said she will abandon her leadership ambitions if Labour chooses Mr Rudd over her, and she called on Mr Rudd to do the same if he loses.

Analysts expect that Ms Gillard has enough support to remain in power for now, but she and her government are unpopular among voters.

And Rudd supporters said that even if he lost, he would simply build support and try again later.

For weeks, Mr Rudd denied widespread rumours that he was planning a run for Ms Gillard's job.

Before Mr Rudd announced his resignation, Ms Gillard had refused to comment on media reports that she intended to fire him as foreign minister for disloyalty.

Mr Rudd accused Ms Gillard of showing disloyalty to him by failing to silence senior ministers who accused him of being dysfunctional and of secretly undermining the Australian government while he served as its top international envoy.