Foes and critics have been pressing on Prime Minister Julia Gillard to put off the fiery scandals engulfing her government, which she did over the weekend by asking two controversial figures to stay out of the Labor picture until they have been cleared of criminal and civil allegations.

The first to get the axe was Labor MP Craig Thomson, who was suspended from the party caucus on Saturday and advised to join the crossbench for the time being, hopefully to give the beleaguered ruling party enough breathing room from the strings of controversies that analysts said have eroded its reputation.

"I believe a line has been crossed about respect for the Parliament and that has given me sufficient concern that I believe it was the right thing to act," Ms Gillard said on Sunday in announcing her decision to ease out Mr Thomson from Labor's active roll.

Mr Thomson, according to the Prime Minister, needs to deal with the accusations of wrongdoings hurled against him, primarily the allegations that he misused funds entrusted to him by the Health Services Union (HSU), a branch of which he headed before joining the Parliament.

The embattled MP has been consistent in declaring his innocence from all the charges, chief among them was he paid for the services of prostitutes using HSU funds.

Notwithstanding, Ms Gillard said it would be best for the Labor-led government that Mr Thomson clears his name outside of the party realm in order to dispel insinuations of likely whitewash in the HSU case, which Fair Work Australia (FWA) has already referred to federal prosecutors for appropriate action.

"I indicated to Mr Thomson that I had decided it was appropriate for him to no longer participate in Labor caucus; to be suspended from the Labor Party," Ms Gillard said.

Mr Thomson, media report said, has accepted Ms Gillard's decision to exile him out of Labor but indicated that he will continue his support for the government.

Also, on-leave House Speaker Peter Slipper has agreed to Ms Gillard's suggestion that he extends his self-imposed hiatus from the Parliament, possibly until probes have been completed on allegations of fraud and sexual harassment.

Ms Gillard stressed that that in asking Mr Slipper to "stand aside for a further period of time," she was not handing down judgement on the House Speaker, who took the position November last year with the support of the Labor Party.

Rather, Ms Gillard said, her actions were motivated by the desire to shield the government from further paralysis and damages.

"I feel keenly that Australians are looking at this parliament and at the moment they see a dark cloud over it ... I want to ensure that Australians can look at this building, look at this institution and feel respect for this institution," the Prime Minister was reported on Sunday as saying by Agence France Presse (AFP).

In a statement, Mr Slipper said he agreed with Ms Gillard's assertion that "it is imperative that the dignity of parliament be upheld."

"(My extended leave) will avoid what could be a controversial debate on the floor of parliament which would not assist the standing of parliament," the Speaker was quoted by The Australian as saying on Monday.

However, Opposition Leader Tony Abbott scored the government for stopping short in completely severing its ties with Mr Thomson, noting that controversial lawmaker may be out of Labor but will remain a staunch supporter of Ms Gillard.

"The prime minister can't disown Mr Thomson's membership of the caucus without disowning his vote as well," Mr Abbott was reported by the Australian Associated Press (AAP) as saying.

"This is a tainted government that continues to rest on a tainted vote," that Liberal leader stressed.

Also, Ms Gillard's way of resolving the controversies appeared inadequate for Australian media mogul Rupert Murdoch, who posted on his Twitter account on Saturday that the "country desperately needs election to get fresh start."

According to AFP, Murdoch described the current situation besetting the government as "dramatic, slimy events in Australian politics."