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By James Grubel
CANBERRA (Reuters) - Australian Prime Minister Julia Gillard stared down a leadership crisis on Thursday and ensured she will lead the government into a September 14 election after she called a surprise leadership vote over her chief rival Kevin Rudd.
Gillard stamped her authority on the governing Labour Party by being re-elected unopposed after Rudd conceded he did not have the numbers to topple her. Treasurer Wayne Swan was re-elected unopposed as deputy prime minister.
The dramatic move to call on a leadership vote came after months of leadership destabilisation, with Rudd's supporters pushing for a change to help revive the party's ailing fortunes in the polls.
"Today, the leadership of our political party, the Labour Party, has been settled and settled in the most conclusive fashion possible," Gillard told reporters. "The whole business is completely at an end. It has ended now."
The Labour Party has now endorsed Gillard over Rudd in three leadership votes. But Gillard faces the prospect of trying to unify a deeply divided party and turning around opinion polls which show her government will be easily defeated in the general election.
"I think they're terminal. There is no way out of this," political analyst Nick Economou told Reuters, adding the leadership tension reinforced perceptions that the conservative opposition would easily win the election.
Gillard's leadership has been under threat for most of the past two years as her minority government lumbered from one crisis to another, despite an economy which avoided recession after the 2008 global crisis and which has seen has seen 21 years of continuous growth.
Gillard, Australia's first female prime minister, replaced Rudd in a party coup in June 2010. The dumping of Rudd, an elected prime minister, angered many voters who have never forgiven Gillard for the way she became leader.
Gillard defeated Rudd a second time in a leadership vote in February 2012, prompting Rudd to promise at the time that he would not challenge and would only take on the leadership again with the overwhelming support of his party.
Rudd on Thursday conceded he did not have the numbers to win a comprehensive victory over Gillard.
"I said that the only circumstances under which I would consider a return to the leadership would be if there was an overwhelming majority of the parliamentary party requesting such a return - drafting me to return. And the position was vacant," Rudd said ahead of the vote.
"I am here to inform you that those circumstances do not exist."
Gillard has consistently failed to arrest a slump in opinion polls, which predict a major defeat in September with Labour losing about 20 seats in the 150-seat parliament.
Australia's largely conservative-minded voters never really warmed to Gillard, the plain-spoken daughter of Welsh migrants, and discontent has deepened despite her ability to negotiate deals with Greens and independents on complex policies.
But voters remain angry that she went into the 2010 election promising to never introduce a carbon tax, only for her to renege and introduce the tax in order to secure support from the Greens.
Gillard almost lost the 2010 election, winning fewer votes and fewer seats than the conservative opposition, but she held on to power by forging agreements with three independents and the Greens.
But divisions remained over the way the party despatched Rudd as prime minister, and Gillard never enjoyed clear majority support from parliament or the public, and never had the full support of her own party.
Her public support wasn't helped by the fact she is not married and has no children and says she does not believe in God, in a country where politicians generally need to appeal to family values.
Her time was also marked by a series of scandals.
One lawmaker was forced out of the party over allegations he spent union money on prostitutes, which he denied. Her choice of parliamentary speaker was forced out over sexual harassment claims, which were later dismissed.
Scandals involving the state branch of the Labour Party in New South Wales, over coal mining licences, have also overshadowed the national government's policy reforms.
That meant Gillard's government regularly failed to win any public praise for her policy victories.
There is little difference in economic policies between the government and conservative opposition. But opposition leader Tony Abbott has promised to scrap a 30 percent tax on coal and iron ore mine profits, and to scrap the carbon tax if his party wins power.
Financial markets had little reaction to the leadership rumblings. The Australian dollar was a shade firmer on the day thanks mainly to a surprisingly strong reading of manufacturing from China, Australia's biggest export market.
The currency was at $1.0380 and holding in a very tight range. Government bonds hardly budged, with investors assuming future borrowing needs would be much the same whichever leader or party was in power.
(Additional reporting by Rob Taylor; Editing by Michael Perry and Robert Birsel)