The Labor leader, Anthony Albanese, has thanked the South Australian factional boss Don Farrell for stepping aside for the New South Wales senator Kristina Keneally to join the party’s leadership team.

After the two right-aligned senators were on a collision course for the position of deputy leader in the Senate, Farrell informed Albanese on Thursday morning that he would not nominate for the role.

Both believed they had the numbers in the party’s caucus to win the job, but Farrell told Albanese he understood the need to have gender balance in the leadership team.

“Don Farrell is well liked by his colleagues, he is respected by me and all of our team,” Albanese said, adding that the decision was a “personal sacrifice” for Farrell.

Senators Penny Wong and Don Farrell in February. Photograph: Kelly Barnes/AAP

“That respect goes up even more today and I thank Don Farrell for putting aside his own personal interests for the interests of our great party, as he has always done.”

Farrell will stay on the party’s frontbench but the leadership team in the Senate is now likely to be Penny Wong as leader, with Keneally as her deputy. Albanese’s deputy leader will be Richard Marles from Victoria.

In the lead-up to unveiling the opposition’s frontbench later on Thursday, Albanese defended the party’s factional system that required one of the party’s rising stars, Ed Husic, to step down from the frontbench to ensure Keneally could be on it.

Albanese said when Labor formed government, he wanted to see Husic returned to the “most senior levels of our party”, saying he was one of his “best mates”.

“Ed is a great advocate for western Sydney, he is a great advocate in particular for new ideas … and when he comes back to the frontbench, which I have no doubt he will, he will be stronger for it he will be more effective and I thank him for his ongoing contribution.”

Albanese also confirmed that the party’s former shadow assistant treasurer Andrew Leigh would be dropped from the frontbench but would be appointed as the deputy chair of parliament’s economics committee.

“He is a good friend, he is gong to continue to have an important role to play,” Albanese said.

The new frontbench will be decided by the factions on Thursday. Albanese will then allocate portfolios. The Queenslander Jim Chalmers is expected to take on the Treasury brief, while the former leader Bill Shorten will also have a senior role in the shadow ministry.

“I am very confident about the team we will put together … that it will be not just competitive but far superior to those opposite,” Albanese said.