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Australian Foreign Minister Kevin Rudd resigned on Wednesday, saying he could no longer work with Prime Minister Julia Gillard, stoking speculation he will challenge her for the leadership.
Gillard's minority government has sunk in popularity as Gillard and Rudd, whom she ousted in 2010, have waged a personal feud that has split their Labor Party and alienated voters.
They differ little on policy, but the battle, described by Rudd as a "soap opera", threatens to trigger an early election and a defeat for Labor's economic reform agenda, including major mining and climate change legislation.
Senior ministers had in the past week urged Gillard to sack Rudd due to the leadership speculation and increasing animosity between the two camps.
