By James Grubel

CANBERRA (Reuters) - Australia's Prime Minister Julia Gillard heads into an election year with her leadership bruised over a union scandal dating back 20 years and with her government struggling to gain voter support after a brutal political year that ended on Thursday.

Despite passing major reforms in 2012, Gillard's minority government trails in opinion polls after enduring a series of political scandals, a leadership fight with former prime minister Kevin Rudd, and regular suggestions that Gillard should be replaced.

However, senior government ministers rallied behind Gillard's leadership on the final day of parliament for the year on Thursday, shoring up her chances of leading the Labor Party into the next election, due around September 2013.

Senior government powerbroker Bill Shorten said the party strongly backed Gillard, while Deputy Prime Minister and Treasurer Wayne Swan laughed off suggestions that the union scandal made Gillard's leadership untenable.

"Those sorts of statements are absolutely ridiculous," Swan told reporters.

Gillard has been under a sustained attack over her role as a lawyer in 1992, when she advised her then boyfriend and union official Bruce Wilson over a union slush fund which is now at the center of fraud claims.

Gillard has repeatedly said she did nothing wrong and had no knowledge of any fraud, but the opposition is now calling for her to resign and for a judicial inquiry, accusing Gillard of failing to fully explain her actions 20 years ago.

"She has consistently given evasive, misleading and obfuscating answers, and that, frankly, is conduct unbecoming of a prime minister of this country," Abbott told parliament.

"SMEAR CAMPAIGN"

An angry Gillard attacked Abbott in parliament, challenging him to back up claims that she may have broken the law and accusing him of running a relentless smear campaign with no evidence of wrongdoing.

"The leader of the opposition does not look to facts, he just looks to sleaze and smear," Gillard told parliament.

The union affair caps off a year when the minority government passed its landmark carbon tax and mining tax reforms, but when its achievements have been largely overshadowed by scandals and internal divisions.

In February, Gillard called a snap leadership vote, defeating Kevin Rudd, the man she overthrew in June 2010, by 71 votes to 31 in a ballot she hoped would stop Rudd supporters from undermining her.

In October, Gillard's parliamentary speaker, Peter Slipper, was forced to quit his job over a long-running sexual harassment case and after the release of a series of offensive text messages.

Gillard's Labor Party was also forced to suspend a lawmaker who is accused of spending union money on prostitutes, lavish travel and meals before he was elected to parliament.

Despite the political setbacks, Gillard has managed to maintain a one-seat majority in parliament, with support from a string of independents and the Greens.

In recent months, polls have shown a resurgence of support for Gillard's Labor, although the party was still behind the opposition and the comeback had stalled as the union slush fund story has dominated media coverage.

The respected Newspoll on Monday found Gillard was within striking distance of the opposition, trailing by only two percentage points in late November, compared with a 10-point gap in September.

But the government is unpopular in the battleground of Western Sydney, where polling shows Gillard could lose up to 10 seats at the next election, meaning she would be swept from office.

Monash University political analyst Nick Economou said the government had gained support in recent months by successfully distancing itself from the Greens, and from the muted public reaction to the carbon tax, which began in July.

"They've been able to legislate, they've been able to get things through. The problem is the government has been giving the impression that it is in crisis all the time," Economou told Reuters.

"I still expect them to be defeated pretty convincingly at the next federal election."


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