Washington (CNN) -- Australian Foreign Minister Kevin Rudd resigned Wednesday, his office said, amid speculation that he might mount a leadership challenge to Prime Minister Julia Gillard.
The Australian media have been abuzz in recent days with reports that Rudd is considering contesting Gillard's leadership of the governing Labor Party.
Observers predicted a showdown could take place next week when Parliament resumes and Rudd was due to return from an overseas trip. But his sudden announcement in Washington in the middle of the night caught people by surprise.
"We thought he was tucked up in bed," said Angela Cox, a reporter for the Australian Channel 7 in the United States. "He called this late press conference, so we knew something must've been up. But I have to say most of us were pretty shocked when he actually said he was resigning as foreign minister."
A spokeswoman for the Foreign Ministry confirmed Rudd had resigned in Washington.
This is not the first time the two senior Labor figures have clashed; Gillard replaced Rudd as prime minister in June 2010 after he lost support within the party.
Tension between them in recent weeks has boiled over into newspaper columns and criticism from other party officials.
"There have been lots of calls for the prime minister, Julia Gillard, to sack him because he's been accused of disloyalty because of all of this speculation that he's doing backroom deals trying to challenge Julia Gillard for the leadership," Cox said. "He did say he felt compelled to do it today because he felt like he didn't have the support of Julia Gillard."
In a statement Wednesday, Gillard called Rudd "a strong and effective advocate for Australia's interests overseas" and said he "strongly pursued Australia's interests in the world."
"I am disappointed that the concerns Mr. Rudd has publicly expressed this evening were never personally raised with me, nor did he contact me to discuss his resignation prior to his decision," she said.
Rudd has insisted that he wouldn't be part of a "stealth attack" on Gillard, but his resignation doesn't mean he is necessarily ruling out a leadership challenge altogether.
"Just because he resigned as foreign minister doesn't mean he can't still work the angles from the back bench," Cox said.
Reporters asked him whether he planned to challenge Gillard, but he "didn't give a strong response to that," she said.
Rudd is considered responsible for bringing the Labor Party back from the wilderness. After 11 years in opposition, the party won office in November 2007 under his leadership.
After enjoying some of the highest popularity ratings of any Australian leader, Rudd's poll numbers took a hit after he delayed his proposed carbon emissions trading scheme.
Gillard took over in 2010, but she has struggled to achieve high approval ratings.
CNN's Sarita Harilela and Jethro Mullen contributed to this report.