A spokeswoman for Ms Gillard confirmed that Mr Rudd, a Mandarin speaking former diplomat who was Labor foreign affairs spokesman while in opposition, would take over from Stephen Smith who has held the job since Labor won the 2007 election.
Following his ousting as prime minister, Ms Gillard promised him a senior frontbench position with speculation covering foreign affairs plus some other possibilities.
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Mr Smith in turn takes over the defence portfolio, vacated by John Faulkner who announced before the election he was standing aside.
Mr Smith will be Labor's third defence minister in three years.
He will hold a press conference in Perth later today to comment on his new responsibilities.
Former small business, competition policy and consumer affairs minister Craig Emerson will take over the trade portfolio from Simon Crean.
Ms Gillard is tipped to announce the rest of her front bench lineup later today.
