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Australian Prime Minister Julia Gillard is announcing that her party will vote next week on its leadership.

Gillard said on Thursday she will abandon her leadership ambitions if her Labor Party lawmaker colleagues choose former foreign minister Kevin Rudd over her in the ballot on Monday.

She called on Rudd to abandon his ambitions if he loses.

Gillard told reporters: "We need a leadership ballot to settle this question once and for all."

Speaking in Washington, D.C., where he announced his resignation as Australia's foreign minister, Rudd said he was encouraged by support from government colleagues to challenge Gillard for the leadership of their party.

Rudd told reporters at his hotel in Washington late Wednesday that he did not believe Gillard could lead the party to an election victory next year.

But Rudd would not say whether he would challenge Gillard in a leadership ballot of Labor lawmakers until he returns to Australia on Friday.

"I've had many conversations with caucus colleagues and with ministerial colleagues. I'm very pleased and encouraged by the amount of positive support that encourages me to contest the leadership of the Australian Labor Party," Rudd said.

He said his supporters regarded him as the best prospect to lead the ruling party to victory in the next elections and "to save the country from the ravages of an Abbot government," referring to the current opposition leader, Tony Abbott.

Gillard ousted Rudd as prime minister in June 2010 in an internal coup, and their centre-left Labor Party scraped through elections later that year to lead a minority government. Polls now suggest Labor would suffer a devastating defeat, but Gillard maintains she has her colleagues' support.