New South Wales Premier, Morris Iemma quit politics on Friday after a disagreement with the governing Australian Labor Party's dominant "Centre Unity" faction about his proposed cabinet reshuffle. The reshuffle was prompted by the resignation of Deputy Premier John Watkins and the sackings of Treasurer Michael Costa and Health Minister Reba Meagher.
The political fallout follows the botched attempt to privatise the state's electricity industry.
The right of the Labor party was presented with a list of colleagues who the Premier wanted in and out of his reshuffled cabinet. MPs were frustrated that Joe Tripodi was not on the our list. MPs rejected Iemma's list and demanded the chance to vote upon it. Mr Iemma then told the faction that unless they accepted his cabinet he would resign. Caucus called Iemma's bluff and said Iemma had lost support of the party.
The party then looked to the left-wing faction of the party and Nathan Rees was appointed unanimously and unopposed, Carmel Tebbutt was appointed as the state's deputy premier. 
It is the first time in 117 years that a Premier has lost support of his own party and the first time in NSW Labor history that the party has been led by a member from the left.
Speaking to the media, Mr Iemma said he could not lead a cabinet that was not of his own choosing.
"I took what I believed to be a package of renewal, reform and refreshment, for the party, the Cabinet. That was not accepted, so I tendered my resignation.
"I wasn't going to serve as the head of a Cabinet that was being foisted on me and I wanted change and that was not going to be possible, so I tendered my resignation."
Following his appointment, Nathan Rees told reporters that he had been elected as Premier of NSW. "Morris Iemma resigned as premier today, I nominated for the vacancy and I was elected unanimously by the full Labor caucus," Rees said.
"We start work today for the people of New South Wales, we start work this afternoon to deliver services to the people of New South Wales".
Rees and Tebbutt were sworn in by Governor Marie Bashir on Friday afternoon.

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NSW Premier Iemma quits, replaced by Rees