Prime Minister Kevin Rudd says he will put his leadership to the vote in caucus on Thursday.
Deputy Prime Minister Julia Gillard had requested a leadership ballot, he said.
"I will be writing to the caucus to convene a special meeting at 9am tomorrow morning," Mr Rudd told reporters at a press conference in Canberra.
Mr Rudd said he was elected by the people of Australia as prime minister of Australia.
"I was elected to do a job," he said.
"I intend to continue doing that job."
Mr Rudd said he'd lost support from key members of the party during the last few weeks.
"It has become apparent to me in the course of the last period of time ... that a number of factional leaders in the Labor party no longer support my leadership," he said.
"That is why it is imperative this matter be resolved."
"I believe I am quite capable of winning this ballot tomorrow," Mr Rudd said.
The prime minister said it was important for the stability of the government and the party that the matter be resolved.
"It's far better for these things are done quickly rather than being strung out over a period of time," Mr Rudd said.
Mr Rudd said if he was returned as Labor leader and prime minister, he would send a clear message to the right faction.
"This party and this government will not be lurching to the right on the issue of asylum seekers," he said.
He also promised to move on the issue of climate change.
He conceded Labor had hit "heavy weather" in recent times.
"A few people have become a bit squeamish about that," he said.
But Mr Rudd said he was not squeamish and was committed to continuing his reform agenda.
Mr Rudd said he was committed to tax reform, referring to the proposed super profits tax on the mining sector.
"However, this obviously has created some challenges and tensions within our party, and as I mentioned before having lost the support of certain factional leaders."
Mr Rudd said he was elected by the people of Australia to do a job, not by the factional leaders of the Labor party.
"Though they may be seeking to do a job on me."
Mr Rudd avoided the question when asked if he'd expect Ms Gillard to stand down as deputy leader if she lost Thursday's ballot.
"I am simply calling for a ballot of the leadership of the Australian Labor Party," he said.
"I believe that's the right and responsible course to undertake.
"My fundamental interests are to preserve the good name and standing of this Australian Labor Party and to act in the national interest."
He urged party colleagues to think, and vote, in the national interest.
"There are national interests at stake here, which go beyond the personal interests of me as an individual.
"Those national interests should be equally in our thinking at a time like this.
"My party's interest is important as well and these two matters should be resolved as a matter of urgency."
Mr Rudd then ended the press conference, saying he had "other matters of urgency" to attend to.
Shortly after Mr Rudd's news conference, deputy Prime Minister Julia Gillard confirmed that she would be a candidate in Labor's leadership ballot on Thursday.
But she would not make any further comment on Wednesday night.
"I will be a candidate in tomorrow's ballot," Ms Gillard told reporters in Canberra.Ms Gillard then walked back into her office, lacking her sometimes cheshire smile.