The Labor Party's election campaign has been stunned by the loss of two candidates in one day, just a week into the campaign.

Prime Minister Kevin Rudd has been forced to dump the Labor Party's candidate for the safe Victorian seat of Hotham, Geoff Lake, over his failure to disclose an altercation with a colleague 11 years ago.

Meanwhile, Labor's charge for the north Queensland seat of Kennedy, Ken Robertson, has stood aside over comments he made about Opposition Leader Tony Abbott.

Last night Mr Rudd issued a statement saying he had requested the party's national executive remove Mr Lake as the endorsed Labor candidate for Hotham.

Mr Lake, a Monash councillor, last month won a bitterly fought pre-selection to contest the seat being vacated by long-serving Labor frontbencher Simon Crean.

Mr Crean's former seat is currently a very safe Labor electorate, with a margin of 14 per cent.

But Mr Lake lost the Prime Minister's confidence after he was forced to apologise for verbally abusing a fellow councillor during an argument at a Monash Council meeting 11 years ago.

News Corporation newspapers reported that Mr Lake apologised to the woman at the time and regretted his actions.

"I was a young mayor and I got angry one night and I spoke to her in angry way, which I acknowledged then and I acknowledge now," Mr Lake said, according to News Corp.

Mr Rudd says he has stepped in.

"Earlier today, I asked the National Secretary to report on a range of allegations concerning Mr Lake's conduct in his previous career in local government - in particular his conduct in relation to fellow councillors at the City of Monash Council," Mr Rudd said.

Dumped: Labor candidate for Hotham, Geoff Lake. ( Twitter )

"The National Secretary has informed me that he is not satisfied that there has been full disclosure about these previous matters.

"Based on the investigation, I have concluded that it is inappropriate for Mr Lake to continue as the endorsed Labor Candidate for Hotham.

"As such I cannot be confident that he has met the standards that I would expect and demand from members of the Federal Parliamentary Labor Party."

Within minutes Mr Lake's profile had been removed from the party's website. Mr Lake has not returned the ABC's phone calls.

Robertson quits race for Kennedy

Meanwhile, Mr Robertson released a short statement saying he had decided not to contest the September 7 poll after he reportedly accused Mr Abbott of being racist.

"I apologise to Mr Abbott for my statement yesterday. While in Far North Queensland we like to use colourful language, my comments were unacceptable," he said.

"I have today stood aside as the Labor candidate for Kennedy in the interests of ensuring that this matter does not distract from Labor's campaign for a fairer Australia."

The Prime Minister said the ALP's national executive will now preselect a new candidate for Hotham ahead of next month's election.

The Opposition says the lose of two candidates shows the Prime Minister has failed to fix Labor's internal problems.

Shadow attorney-general George Brandis says Mr Rudd has failed to reform the Labor Party, despite promising to do so when he retook the Prime Ministership.

"Plainly there is a process issue here. It hasn't gone away," he said.

"Mr Rudd promised that there would be a new way at this election campaign, that he would undertake root and branch reform of the Labor Party.

But, it was all talk, because it plainly hasn't happened."

Senator Brandis says it shows that Labor's campaign is "chaotic".

"To lose two candidates on the same day, within six days of the calling of the election raises real questions about how chaotic the Labor Party campaign is," he said.

"In fact, the chaos of the Labor Party campaign is beginning to resemble the chaos we remember from the time when Mr Rudd was last the Prime Minister."