Kevin Rudd new Labor leader

Dream team or another challenger: Rudd and his ambitious deputy Julia Gillard

Ex diplomat Kevin Rudd has won a ballot for the Federal Labor Leadership beating incumbent Kim Beazley.

Rudd won the ballot 49 to 39, according to the Caucus spokesperson.

Rudd is the fifth leader Labor has put up against Coalition leader, John Howard since he won power ten years ago.

The next election is expected later next year, although some have speculated Mr Howard may be tempted to go early to capitalise on division in the Labor Party.

Rudd won with the support of left votes from his new deputy, Julia Gillard.

Rudd's greatest challenge will be to build a working team with many of the Parliamentary Party leaders previously Beazley supporters. These include Shadow Treasurer, Wayne Swan, but there has been speculation if Gillard wants to take this role.

Mr Beazley told Caucus it was time to unify behind the new leadership, claiming Mr Rudd would be next Prime Minister.

Labor needs a five per cent swing to win 16 seats to win power in its own right.

The shape of the front bench has been deferred till Thursday.