Julia Gillard’s most senior supporters concede Kevin Rudd is within a handful of votes of being able to snatch back the prime ministership.
Despite Ms Gillard yesterday belligerently declaring she would defeat Tony Abbott at the next election, her senior loyalists now expect Mr Rudd to challenge for the Labor leadership.
This is despite Mr Rudd having ruled out another challenge last year, after being defeated 71 votes to 31.
Rudd loyalists believe the former PM is nearing majority support in the 102-member caucus - a claim that is now accepted by Gillard backers, although neither side rules out MPs declaring themselves in both camps.
If it got to another leadership ballot, Ms Gillard’s backers believe self-interest among marginal seat holders would see Mr Rudd returned.
Despair has deepened in Labor about her leadership and the Government’s direction, with open sniping yesterday about the botched introduction of changes to media law.
Knowing Rudd loyalists are determined to push her to the brink this week, Ms Gillard declared she would not be shifted.
She dismissed suggestions from Mr Abbott that failure of the media law changes would be a de facto vote of no confidence in her Government.
"The election will be on September 14 and let me say clearly to the Leader of the Opposition it will be a contest counter-intuitive to those believing in gender stereotypes but a contest between a strong feisty woman and a policy weak man and I’ll win it," she told Parliament.
The Rudd camp is claiming that Bob Carr, who was parachuted into Parliament by Ms Gillard last year to replace Mr Rudd as Foreign Minister, and Ageing Minister Mark Butler have confided they have lost confidence in Ms Gillard but both ministers yesterday rejected this.
Senator Carr said media was in a "frenzy of speculation".
"If the story had been put to me it would have been denied, and the story could not have appeared. The story was not put to me, nor my staff," he said in Washington DC.
"I am loyal to Julia Gillard and Julia Gillard, in my view, will lead the Labor Party to the election in September."
Mr Butler, a senior Left wing powerbroker who could influence several caucus votes, tweeted: "Still a proud member of Julia Gillard’s team, contrary to latest media frenzy."
While the Government scrambled to find a face-saving retreat on the media laws, Labor elder Simon Crean vented his frustration at the lack of process in the way the changes were handled.
"You won’t get the right outcomes unless you go through proper process," Mr Crean said.
"I hope it’s another lesson to all of us about the right way to do things."Chief Government whip Joel Fitzgibbon, a key Rudd ally, also criticised the way the media law changes had been sold, saying not enough focus had been given to the victims of journalists’ excesses, including sports stars and grieving families.
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