PRIME Minister Julia Gillard has moved to lift a "dark cloud" over the Parliament by suspending Labor MP Craig Thomson and demanding Peter Slipper stand down indefinitely from the Speaker's chair.
Ms Gillard, who returned from overseas on Saturday morning, said she spoke with Mr Slipper this morning and indicated it was best he "stand aside from the position of Speaker for a further period of time".
"Mr Slipper has indicated to me that he is also of that view," Ms Gillard said.
The Sunshine Coast MP, who stood down as Speaker a week ago in the wake of fraud allegations, is expected to release a statement later today confirming the decision.
He denies the allegations, as well those he sexually harassed staff member James Ashby between January and March this year.
It had been his intention to only stand aside as Speaker pending the outcome of the criminal allegations. Mr Slipper will continue to formally hold the position of Speaker and the generous salary the role attracts, but will not have a vote in Parliament.
The Prime Minister told Mr Thomson last night it was no longer appropriate for him to sit in the Labor caucus.
Mr Thomson, who faces allegations of fraud from his time as national secretary of the Health Services Union, will head to the crossbench as an independent, but will continue to vote with the Gillard government. He said he intended to return to the ALP when the allegations were resolved.
The Member for Dobell has maintained his innocence throughout the four-year Fair Work Australia investigation.
Ms Gillard said while both men were entitled to the presumption of innocence, she had made a "judgement call" to protect the integrity of the Parliament.
"I am motivated by what is right in these circumstances," she said.
"The views of Australians as they look at the Parliament matter.
"I have made a judgement call ... because I want Australians to be able to look at the Parliament and respect the Parliament.
"And I believe a line had been crossed about the ability of Australians to confidently say that they had respect in our Parliament."
Ms Gillard said she had "felt very sharply the judgments and concerns of the Australian people" since returning from Turkey yesterday.
"Certainly since I have returned to Australia I've been increasingly aware of the depth of feeling. I was not unaware when I was travelling overseas. These matters have been building for some time," she said.