The 55-year-old sealed his dramatic return after a leadership ballot on Wednesday, in which Gillard, the country's first female premier, was deposed in a party-room vote and announced her retirement from politics.
"I will do my absolute best," said Rudd after being sworn in at Government House in Canberra by Governor General Quentin Bryce, with his wife Therese Rein and children watching.
Rudd's resurrection marks a stunning turnaround for the former premier who will now lead Labor to elections scheduled for September 14, which polls predict Tony Abbott's conservative opposition will win by a landslide .
Today, Gillard's Transport Minister Anthony Albanese was sworn in as Rudd's deputy while former Immigration Minister Chris Bowen was appointed treasurer, with other senior appointments yet to be made.
Labor's popularity has tanked under Gillard but Rudd, who ended a decade of conservative rule with a landslide 2007 election win, remains popular with voters and his elevation is expected to give the party a significant boost.
Analysts are tipping he will bring the election forward to August 24 in order to capitalise on an expected surge in Labor's popularity, although Albanese said a "proper discussion" was needed first.
There are seven crossbenchers in the House of Representatives and Rudd needs to secure the support of the majority, which he should achieve with at least five expected to get behind him.
The embattled Gillard called the leadership ballot after a day of internal party manoeuvring in favour of her arch-rival.
Rudd won the vote of Labor lawmakers 57 to 45 -- the third time since the 2010 election that Gillard's hold on power was tested.
Then in March this year, Labor elder statesman Simon Crean made an abortive attempt to reinstall Rudd, who refused and vowed never to challenge Gillard again.
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