Mr Rudd has told a press conference that earlier this evening Ms Gillard visited him to request a leadership ballot.
Mr Rudd says the Labor caucus will vote on the party and Federal Government leadership tomorrow at 9:00am AEST.
"Earlier this evening Julia Gillard requested a ballot for the leadership. I will be writing to the secretary of caucus to convene a special meeting at 9:00am tomorrow morning," he said.
"It's important for these matters to be resolved quickly."
Ms Gillard has confirmed she will run against her leader tomorrow.
"I will be a candidate in tomorrow's ballot," she said.
Events have moved quickly today as support for Mr Rudd collapsed around him. Things came to a head this evening as a number of Labor's most senior figures, including Ms Gillard, met in Mr Rudd's office.
This evening the Prime Minister told the media he had lost the support of factional leaders in the party.
The Australian Workers Union, the Health Services Union and the right faction in many states have shifted their support to Ms Gillard.
"It has become apparent to me that a number of factional leaders no longer support my leadership, that is why it is imperative these matters be resolved," he said.
"I was elected by the people of Australia to do a job. I was not elected by the factional leaders of the Labor Party to do a job. Although they may be seeking to do a job on me."
But Mr Rudd says he believes he can win the leadership vote.
"We've gone into some heavy weather of late and a few people have become, shall I say, a little squeamish at that," he said.
"I'm not for getting squeamish about those things, I am about continuing the business of reform and providing good strong proper government for the people of Australia, the people of Australia who elected me as Prime Minister," he said.
Mr Rudd says if he wins the ballot tomorrow he will not be giving ground to the right on issues like climate change and asylum seekers.
"If I return as the leader of the Government and Prime Minister, I will be very clear of one thing, this party and Government will not be lurching to the right on the question of asylum seekers," he said.
He would not speculate whether Ms Gillard would stay on as Deputy PM if she lost the ballot tomorrow.
But he defended his Government's record, and said he was elected by the people of Australia, not the ALP's factions.
"These are important reforms, infrastructure, health, hospital, closing the gap, also the apology. As Prime Minister of the country I'm proud of each and every one of these achievements," he said.
ACT Labor Senator Kate Lundy says she will vote for Ms Gillard, who she says she will be an inspiring prime minister.
Australian Workers Union chief Paul Howes says his union is also backing Ms Gillard.
"Labor's message had been lost for the last few weeks, and in fact months, under the Prime Minister's leadership," he told ABC's Lateline program.
"We have to look at what's in the best interests of our members, of our union, to ensure that fairness remains in our members' workplaces.
"We think that Julia Gillard is the best option to lead Labor to victory at the upcoming election."