Prime Minister Julia Gillard flatly denied on Thursday reports that she offered the cabinet post vacated by Kevin Rudd to Bob Carr, calling media reports about the job offer as "completely untrue."

The Australian had reported earlier this week that Carr, a former New South Wales premier, was approached by an emissary supposedly dispatched by Ms Gillard asking him to consider a senior position in Canberra.

Media reports have indicated that Carr was being groomed to join the Australian Senate in lieu of Mark Arbib, who resigned Monday following the caucus vote that cemented Ms Gillard's hold on the Labor leadership.

Carr, according to The Australian, hinted that he might be assuming the Foreign Ministry post vacated by Rudd following his failed bid to reclaim the seat he lost to Ms Gillard in 2010.

Subsequent reports then suggested that Ms Gillard actually met and spoke with Carr, scenarios that the latter confirmed but later clarified as news emerged that the Labor leadership had decided to take back its earlier offer to Carr.

The backtracking was attributed to supposed strong opposition that came from Defence Minister Stephen Smith, who as early as last week has been touted to replace Rudd when the latter resigned.

By middle of the week, the job offer from Ms Gillard was withdrawn, The Australian said, with Federal Treasurer Wayne Swan tasked to formally inform Carr through a phone call.

He was instead offered the Defence Ministry but Carr politely declined, the paper said.

On Thursday, Carr came out with a statement supporting the official position of Labor, that there was no clear offer for him to become Foreign Minister to begin with.

"Prime Minister Gillard had definitely not made any offer about the foreign affairs ministry nor had any one on her behalf," Carr was reported as saying by The Australian.

When confronted in the Parliament by Opposition Leader Tony Abbott about the matter, Ms Gillard merely advised the Liberal stalwart: "Don't believe everything you read."

Abbott, however, pressed on that what transpired, which he stressed had definitely humiliated the former NSW premier, only showed that Labor powerbrokers have fortified their control of the party after supporting Ms Gillard on her leadership showdown with Rudd.

"The Prime Minister has been bullied, beaten and leaked against by the faceless men who are running the Labor Party and controlling this government," Abbott was quoted by the Australian as saying.

Also, Deputy Opposition Leader Julie Bishop agreed that the Carr fiasco proved that the Prime Minister was not in full control of Labor, forcing her to concoct stories to cover up such reality.

"This whole sorry farce shows that she has difficulty with the truth ... and she has a rare ability of brazenly denying the undeniable," Bishop was reported by the Australian Associated Press (AAP) as saying on Thursday.

"It shows that when she is under pressure, she will say black is white," Bishop added.

However, Communications Minister Stephen Conroy came to the defence of Ms Gillard and insisted that what happened was an example of a news story that blew out of proportion, stressing that too much speculations were played up on how Labor will deal with Rudd's exit from the cabinet.

"It's about a storm in a teacup," Conroy declared in an interview with Seven Network in characterising the issue.