Gillard promised elections this year after taking over from Rudd, who was toppled less than three years into his first term as leader after support for him in the ruling Labour Party collapsed.
Her appointment was also reportedly executed to avoid electoral defeat, with opinion polls then showing that Labour was headed for only one term in power.
An election announcement will formally begin a six-week campaign, that has unofficially been under way since Gillard deposed Rudd on June 24.
The opposition has predicted "massive" instability within a Labour government that is set to include Rudd as a senior minister.
"We are going to be in for three years of massive instability," Joe Hockey, finance spokesman for the opposition Liberal Party, told ABC radio.
The Labour government is narrowly ahead in opinion polls but is struggling to sell sensitive policies on the economy, resources, climate change and the handling of asylum seekers.
|The issue of asylum seekers is set to be a major issue in the campaign [AFP]
Gillard has pledged to introduce a new 30 per cent mining tax if elected, raising $9bn from 2012, but the opposition has vowed to dump the tax, even though it has been agreed by global miners BHP Billiton, Rio Tinto and Xstrata.
The government also said it will return a budget surplus by 2013, although opinion polls show voters view the Liberal-National opposition as better managers of the economy, despite Labour's efforts at steering the economy through the global financial crisis.
The political rhetoric concerning asylum seekers has been the loudest ahead of the expected polls, with Gillard announcing last week that the government has proposed setting up a regional asylum processing centre in East Timor as part of a new effort to tackle people smuggling.
East Timor's government however, has rejected the proposal, with some Timorese MPs saying they did not want their country to become a "prison island".
'Killing the government'
As talks continue over the plan, Chris Evans, the Australian immigration minister, said public anger over boat arrivals was "killing the government", in an extraordinary admission that may affect Gillard's credibility on the sensitive issue.
Rudd had dumped an off-shore claim processing scheme for asylum seekers when he took office in 2007.
Since then, more than 4,000 asylum seekers have entered Australian waters in nearly 150 boats, many of them Afghans and Sri Lankans who paid people-smugglers to ship them to Australia.
They have overflowed an offshore detention centre on Christmas Island in the Indian Ocean, and in recent months, detainees have been moved to the mainland for holding while their refugee applications are examined.
In April, Rudd's government attempted to reduce the flow by imposing a temporary suspension on processing asylum claims from Sri Lankans and Afghans.