Canberra:  Australian Prime Minister Julia Gillard is likely to announce her new ministry today after independent MP Rob Oakeshott turned down an offer to become a minister in the Labor Government.

Oakeshott, who had remained open to the offer of a ministry during the fortnight of negotiations over the hung Parliament produced by the August 21 election, said he told Gillard last afternoon that he would not be joining her frontbench.

He said there would have been political problems for the $A10 billion regional programmes package he had negotiated along with fellow independent MP Tony Windsor, if he was also the minister overseeing the regional affairs portfolio.

"I think there are some organisations still in Parliament that may want to bring the package down via me, and if I wanted to, if I am genuine that this package is important, then I'm hoping that it can be brought home by someone with potentially less thorns on them at the moment than me," Oakeshott said.

He said he had been weighing up whether the ability to drive reforms for regional Australia as a minister would outweigh the loss of independence a portfolio position would entail.

Oakeshott's refusal clears the way for Gillard to finalise her new ministry. She has said she will offer a senior portfolio to former prime minister Kevin Rudd, with commentators touting several options where his talents could best be used. These include foreign affairs, aboriginal affairs and a new portfolio of climate change — all issues that Rudd is readily conversant with.

The foreign affairs portfolio would be a natural fit for Rudd, a former diplomat who has recently been appointed to United Nations Secretary-General Ban Ki-moon's high-level panel on global sustainability. He is also a former diplomat to Australia's largest trading partner China and is fluent in Mandarin.

On aboriginal affairs, Rudd made history within days of taking office in 2007 when he officially apologised to Australia's Aboriginal people for past government wrongs committed against them, including the "stolen generations" of indigenous children who were forcibly taken from their families to be assimilated into white Australian society.

The key issue of climate change is unfinished business for Rudd, who has called it "the greatest moral challenge of our time".

The new ministry will be sworn in early next week.