Prime Minister Julia Gillard finally settled Labor's leadership question when she rousingly vanquished the challenge raised two weeks ago by former Foreign Minister Kevin Rudd and now she emerged, narrowly though, as Australia's preferred leader.

The latest Newspoll survey, commissioned by The Australian, showed that Ms Gillard gained the upperhand over Opposition Leader Tony Abbott at 39 percent to the latter's 37 percent.

Ms Gillard effectively recovered the margin she lost to Abbott at the start of 2011, also at the height of speculations that Rudd had been angling to retake the position he lost in June 2010, which was thwarted by the Prime Minister last month.

Voters' satisfaction with the manner the Labor-led government has been handling the country's affairs also surged over the past two weeks, from 26 percent to 28 percent, the Newspoll survey said, which was conducted Friday and Saturday last week.

Yet Ms Gillard's current numbers may not be enough to propel her for another term at The Lodge as the Coalition is poised to win the next election, with 53 percent of voters set to elect the opposition group as against to the 47 percent leaning to Labor in two-party-preferred terms.

Also, the federal government's primary vote dipped to 31 percent, behind by 12 points to the Coalition's 43 percent, though its numbers also chipped away two points from the last survey, Newspoll said.

Labor on the other hand, gave out four points of its primary vote, underscoring the political challenges that Ms Gillard needs to hurdle following her decisive win during the Labor caucus vote that dashed Rudd's hopes of being prime minister anew.

Senior Labor Minister Craig Emerson called the latest poll results as indicative of rising support for the government amidst expectations that Abbott would have mustered more lead against Ms Gillard in light of the recent leadership tussle that the ruling party had dealt with.

"If there is any surprise in this poll, Mr Abbott should be galloping away," Emerson was quoted by the Australian Associated Press (AAP) as saying on Tuesday.

Also, recently appointed Foreign Minister Bob Carr viewed the Newspoll data as defining the sliding support for the performance of the Coalition, specifically that of Abbot, who he described as "a cheapskate hypnotist in a rundown circus."

Australian voters, Carr told AAP, were far too intelligent to be sold on Abbott's antics.

The Coalition, however, hailed the results as a grim note for Ms Gillard on what to expect next year.

"We have seen again the Australian people have rejected again what the Labor caucus endorsed two weeks ago," opposition frontbencher Scott Morrison said.