The federal Labor Caucus has approved the Prime Minister's plan to allow party members half the votes in electing the leader of the party.

Caucus members gathered at Balmain Town Hall to vote on the reforms, which Prime Minister Kevin Rudd has said were aimed at bringing back disillusioned party members and encouraging others.

It is nearly a month since Caucus reinstated him in the job he was dumped from three years ago.

Now, for a leadership spill to occur in government, 75 per cent of Caucus will need to sign a petition to force a ballot.

However, they decided Mr Rudd's proposal for a 75 per cent threshold of Caucus support to trigger a leadership ballot in opposition was too high.

Labor backbencher Daryl Melham says there was overwhelming support to lower the cut-off to 60 per cent.

Mr Rudd said Labor has decided to democratise the party for the future.

"Each of our members now gets to have a say, a real say in the future leadership of our party," he said.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 5 minutes 55 seconds 5 m ALP Caucus endorses Rudd's reforms ( Sabra Lane ) Download 2.7 MB

"Decisions can no longer simply be made by a factional few.

"But these reforms also extend beyond party lines. They go to the Australian public itself.

"The Australian public now have certainty, Australians demand to know that the prime minister they elect is the prime minister they get and that is underlined by these reforms."

Mr Rudd also used the meeting to brief Caucus on his new asylum deal with Papua New Guinea and changes to the Government's carbon pricing policy.

Before the gathering, Deputy Prime Minister Anthony Albanese ruled out an election announcement today, saying: "I can assure you that the PM is not planning to visit Yarralumla today."

Outside, a group of noisy demonstrators gathered to voice their opposition to the asylum deal, accusing the PM of being "a racist coward".