Kevin Rudd has resigned as foreign minister.
Mr Rudd called an extraordinary media conference in Washington DC just after 1am local time (1700 AEDT).
Mr Rudd says he'll return to Brisbane on Friday and will make a full statement on his future before parliament resumes on Monday after consulting with family and colleagues.
'While I am sad to leave this office I am sadder still that it has come to this,' Mr Rudd said.
He said a number of ministers and 'faceless men' had publicly attacked his credibility.
Mr Rudd's decision comes after four days of frantic speculation he was threatening Prime Minister Julia Gillard's authority.
Senior Labor figures had on Wednesday urged Ms Gillard to bring the leadership to a head.
Mr Rudd said the Australian people regarded the speculation as little more than a soap opera.
'They are right,' he said.
'Under the current circumstances, I won't be a part of it.'
To continue in the job, would mean be distracting for the government, Mr Rudd said.
Mr Rudd said there had been some 'similar factors at play' in June 2010 when he lost the prime ministership.
'It's time for some plain speaking on this,' he said.
'The truth is I can only serve as foreign minister if I have the confidence of Prime Minister Gillard and her senior ministers.
'In recent days Mr (Simon) Crean and a number of other faceless men have publicly attacked my integrity and therefore my fitness to serve as a minister in the government.
'When challenged today on these attacks Prime Minister Gillard chose not to repudiate them.
'I can only reluctantly conclude that she therefore shares these views.'
Mr Rudd said he was sad to leave the office.
'The simple truth is I cannot continue to serve as foreign minister if I do not have Prime Minister Gillard's support,' he said.
'I therefore believe the only honourable thing, and the only honourable course of action, is for me to resign.'
Australia must be governed by the people, not party factions, Mr Rudd said.
'I promise you this - there is no way, no way, that I will ever be part of a stealth attack on a sitting prime minister elected by the people,' he said.
'We all know that what happened then was wrong and it must never happen again.'
Mr Rudd said it was now up to caucus to decide on the leadership.
'There is one overriding question for my caucus colleagues and that is who is best placed to defeat Tony Abbott at the next election,' Mr Rudd said.
'Mr Abbott, I believe, does not have the temperament or the experience to ever be elected to hold the high office of prime minister of Australia.
'But at present and for a long time now he has been on track just to do that.'
Mr Rudd thanked his family for their support.
Mr Rudd said he had few options in announcing his resignation overseas.
'The truth is I feel very uncomfortable doing this from Washington and not in Australia,' Mr Rudd said.
'But I don't feel like I have a choice given the responsibilities over the days ahead.'
Mr Rudd said the ongoing leadership speculation about the federal party was hurting Labor's prospects in the coming Queensland election.
He said the saga was bad for his friend, Queensland premier Anna Bligh.
'I believe the good people of Queensland deserve some clear space over the coming month as they make up their minds on a very important decision on the future of Queensland, my home state,' he said.
Mr Rudd's daughter Jessica tweeted: 'Effing proud of you, Dad xxxx'.
His wife Therese Rein responded: 'Me too, Kevin xxxx'.
