Julia Gillard's Federal Labor Government looks like being totally wiped out in the coming election, potentially leaving Labor with only a small handful of seats in the new Parliament with an Abbot Liberal National Party Government.

Such a situation could leave Labor in the political wilderness for many years without much hope of regaining power for a generation, just as Labor was in opposition for 23 years until Gough Whitlam gained power back in 1972 under a platform of change over a tired Liberal National Party Government. Many Labor members of Parliament have closely examined the latest polling and realize they have almost no chance of retaining their seats under Gillard leading the election campaign. Many pollsters believe Gillard's personal unpopularity maybe generally holding down the potential Labor vote.

Meanwhile Kevin Rudd is wandering around outer suburban shopping malls in marginal seats, being mobbed like a pop star and looking a winner on television. This is in contrast to Gillard's appearances which make her look cornered and on the defensive. Rudd has always been able to use the media exceptionally well, in contrast to Gillard who prefers the parliament as a forum to her advantage.

At the same time Labor factions are in disarray and contemplating what the political future would be like on the opposition benches under a conservative Abbott government, capable of becoming a Howard- style government of union bashing. If Abbott down the track of any future government he leads introduces workplace reforms, they might have the potential to destroy the Australian Union Movement as Australians have known it. This scenario has from the Labor perspective brought about much thinking and discussion about how to remedy this oncoming disaster.

Labor Senator Trish Crossin who was tipped off from her No. 1 position on the senate ticket by Gillard's personal intervention, has come out publicly stating that Rudd would be the better person to lead Labor into the election. However as of today, Kevin Rudd has indicated that he will not mount a challenge.

At a door-side press conference on Tuesday morning in Canberra, Gillard reiterated before any journalist had a chance to ask any questions that she will lead Labor into the next election. Trying to change the focus towards school reform, Gillard went on to say that "a breath spent on that speculation or rumor mongering, is a breath that is not spent on putting the case for improving our schools for our kids."

The Australian media does not usually invent leadership stories, so obliviously someone within the government is feeding parliamentary reporters with information as a leverage to try and persuade Gillard to stand down as prime minister. The Rudd forces hope that this move would terminally weaken Gillard's position and leave her with little choice but to have a leadership spill once again. This is putting enormous pressure on her with two weeks to go. This leadership tension is exposing her poor credibility with the Australian people, many of whom believe she wasn't ethical when taking the leadership from Rudd in 2010.

Australian media reports confirm that a number of senior cabinet ministers are now viewing Gillard's position as not sustainable and considering a return to Rudd, who may provide the only chance for labor to perform well.

At this point, the unions still support Gillard. However Bill Shorten, Minister for Employment and Workplace Relations position vis a vis Gillard and Rudd will be crucial. As a former Australian Workers Union leader, he is the power broker behind Gillard's leadership and was instrumental in installing her as leader in 2010. Should Shorten change camps, Gillard's union support is likely to evaporate, along with at least 1-15 votes in the party caucus room. This would almost be enough to put Rudd back as prime minister.

The problem won't go away and Shorten's support may be questionable. So the Labor Party leadership is now again subject to a standoff for the third time in as many years.

On the surface, this choice looks an easy one, with the government facing almost certain defeat. Although popular among many women, Gillard has a major credibility gap which she has not been able to restore, even with the economy running reasonably well. Her achievement of holding together a minority government for a full parliamentary term holds no respect by anybody within the Australian political scene.

But Rudd is an enigma who has been chipping away at Gillard's position for the three years since he was disposed as rime minister. Former Labor Leader of the opposition and now media commentator Mark Latham on Monday night of the popular Q&A program accused Kevin Rudd of carrying out a "jihad of revenge against Gillard, going beyond normal revenge but into the realm of evil".

Many former cabinet colleagues still harbor strong memories of Rudd's domineering style of management, his anger, tantrums, some say what was bordering on Narcissism. Many stories of his cabinet room antics still roam the parliamentary corridors, and should Rudd once again get the top job, there will be no doubt some that would refuse to serve him as ministers.

However this time the issue has come down to a matter of principle, or survival. Should Rudd be rewarded for his continued undermining of the Gillard premiership, or should Labor be pragmatic and try and win this election with the only potential winner they have?

Rudd as a campaigner would potentially change the whole dynamics of the election. He could distance himself from areas where labor's performance will be criticized and campaign in a similar manner to his performance in 2007. It would be hoped from the Labor side that the Australian people, after seeing a wrong righted, might return to Labor, particularly traditional voters. This is Labor's only chance of holding onto power according to the polls.

Tony Abbot knows how formidable Rudd would be as an adversary and mighty forgo the short term victory of seeing Gillard fall on her sword to prevent his worst nightmare, a face-off with Rudd on the hustings. With Rudd, Australians would take more interest in the campaign, increasing the uncertainty of an Abbot victory.

The omens for Gillard don't look too good, and her traditional supporters from outside the parliament like former Labor Prime Minister Paul Keating are so far silent. The Australian media is prepped up for a good story and frankly speaking an Abbot-Rudd election campaign will be more interesting.

The next week is not about whether Gillard or Rudd leads the Labor Party into the election. It's about whether Labor survives electorally as a party. Labor needs to undergo massive reform and rebuilding if it's going to be relevant in 21st century Australia. The structure of the party is over 130 years old and is dominated by an ever shrinking union movement. Labor's overall philosophy also requires a review to make it stand out as electorally viable. As opposition frontbencher Malcolm Turnbull said on the same program as Mark Latham on Monday night, these reforms are best made while in opposition.

This could be a very significant week for Labor, a week that will definitely go down in the annals of Labor movement history, no matter what the outcome.