JULIA Gillard has vowed to "fight with every ounce of my being" to ensure Labor wins the next election as she took on the historic role of Australia's first female prime minister.
She has promised to go to the polls and seek a mandate from the people "within months" after winning the Labor leadership unopposed on Thursday morning.
After denying for months that she wanted the leadership, Ms Gillard told reporters she had decided finally to put up her hand because she believed a "good government was losing its way".
"It was necessary for me to take this step to take control and to ensure that the government got back on track," she said.
Ms Gillard said she took her fair share of responsibility for the Rudd government's record including the errors.
"I know the Rudd government did not do all it said it would do, and at times it went off track," she said.
Kevin Rudd on Thursday morning gave in to the inevitable fact that he had been abandoned by the majority of his party after signalling just 12 hours earlier he would fight for his political life.
He stepped down at a special caucus meeting but didn't recontest the leadership, giving Ms Gillard a clear run for the top job.
The country's first female Governor-General, Quentin Bryce, performed the ceremony at Government House in Canberra on Thursday afternoon after Ms Gillard addressed the nation as head of the Labor Party. Ms Gillard was greeted with a kiss by her partner Tim Mathieson as she entered the room for the swearing in.
Kevin Rudd decided not to stand in this morning's ALP leadership ballot, relinquishing the Prime Ministership and handing power to his deputy Julia Gillard.
Rudd addressed the caucus, but ignored questions from reporters as he left the caucus room with senior ministers John Faulkner and Kim Carr and Queensland backbencher Jon Sullivan.
Accompanied by his family, Mr Rudd later addressed the nation with a heartwarming speech where he announced he would contest his seat of Griffith at the next election.
Mr Rudd also attended this afternoon's Question Time where Ms Gillard faced Opposition Leader Tony Abbott for the first time as Prime Minister. Abbott's first question to Gillard was about the resource super profits tax.
Labor is expected to quickly get itself on an election footing to take advantage of the fresh start offered by a new leader.
In one of her first moves as leader, Ms Gillard vowed to cancel the taxpayer-funded advertisements targeting the mining industry and opened her door to the sector to discuss its problems with the resource super profits tax.
Ms Gillard also promised to prosecute the case for a carbon price "at home and abroad", but did not specify a time frame.
Mr Rudd will no longer travel to Toronto for the G20 leaders summit this weekend. A spokesman for Mr Swan said the new deputy prime minister would attend the G20 instead and would leave Friday for Canada.
While Labor had remained a nose ahead on a two-party preferred vote in the opinion polls, Mr Rudd's personal support was sliding. It appeared Ms Gillard had stronger voter appeal against Tony Abbott.
Policy bungles including the home insulation scheme, as well as the delayed climate change plan and debate over the super profits tax hampered Rudd’s support, notably in regional communities across Australia.
Highlights during Kevin Rudd’s time as Prime Minister include the signing of the Kyoto Protocol, an apology to Indigenous Australians for the "stolen generations", the 2020 Summit and paid parental leave.
Rudd's demise brought an immediate response from the Christian lobby, which may not be impressed with an unmarried, childless prime minister.
In a statement, the Australian Christian Lobby congratulated Ms Gillard on becoming Australia's first female prime minister. It urged Ms Gillard to confirm "the values in society that proved attractive to many Christians throughout Australia under Mr Rudd".
Ms Gillard has already stated she would not move into The Lodge unless she was re-elected and that she would call an election in the coming months. It is unknown whether or not her long-term partner Tim Mathieson would join her at The Lodge if she is re-elected.
Kevin Rudd's take over began to unfold on Wednesday morning when NSW powerbroker Mark Arbib, Victorians Bill Shorten and Dave Feeney, and South Australian Don Farrell visited Ms Gillard to tell her they had lost confidence in the Prime Minister. The Australian Workers Union also backed Gillard in the 12-hour take over.
About Julia Gillard
Born in Wales, Australia's 27th Prime Minister migrated to Australia with her family in 1966.
While studying arts and law in Adelaide, Gillard was appointed the national president of the Australian Union of Students (AUS) in 1983. From there she worked closely with the unions as a solicitor and partner at law firm Slater and Gordon and became chief of staff to then Victorian Opposition leader John Brumby from 1995 to 1998.
Gillard was elected into Federal Parliament in 1998 and held a number of Shadow Ministerial portfolios including Population and Immigration, Reconciliation and Indigenous Affairs, Health, Employment and Industrial Relations, and Social Inclusion.
Elected as Labor's Deputy Leader in December 2006, Gillard was sworn in as Deputy Prime Minister after the federal election in 2007 as well as the Minister for Education, Minister for Employment and Workplace Relations and Minister for Social Inclusion. She acted in the position of Prime Minister while Kevin Rudd attended a United Nations meeting in Bali in 2007.
Forced to defend the Federal Government's high school laptop scheme, Gillard again warded off complaints in March that it lacked IT support. A report written by a panel of information technology experts stated there were "major areas of risk" in providing IT support for the student laptop roll-out.
Gillard said the federal government had entered into agreements with the state governments which addressed every issue and the roll-out of computers would be delivered in the time frames promised.
Julia Gillard also presided over the troubled school building program. In April she bowed to rising public concern about alleged rorting in her $16 billion school building program by setting up a taskforce to investigate complaints.
Gillard has no children and resides with long-term partner, hairdresser Tim Mathieson.