New Prime Minister Julia Gillard said she is honored to be Australia's first female prime minister.
"I feel very honored and I'll be making a statement shortly," Gillard told reporters.
Small Business Minister Craig Emerson said the coalition will now have a great fight on its hands with Julia Gillard at the helm.
Asked if the Labor Party had done the right thing by Rudd, Emerson said: "Look Julia is prime minister, she worked hard for that, she has been a very effective deputy, I congratulate her, I think everyone does."
Emerson said the government will be very strong and unified heading into the election.
Gillard had been tipped to win up to 74 of the 112 Labor caucus votes.
Gillard is expected to make a full statement in the next 90 minutes.
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