UPDATE 6.30am: New NSW Premier Kristina Keneally will spend her first day on the job today trying to heal the wounds of a fractured party and win back the trust of the NSW public.

Ms Keneally will be the state's first female premier after ousting Nathan Rees in a leadership challenge late on Thursday.

US-born Ms Keneally defeated Mr Rees 47 to 21 votes in a Labor caucus meeting.

The planning minister said her elevation to the state's top political job was an opportunity for a "new beginning" and "healing" within the government.

During her first press conference, Ms Keneally described herself as a "40-year-old working mum" who planned to restore public trust in the state government.

She said she would focus on driving economic recovery, increasing jobs and prosperity for NSW families and caring for the most vulnerable members of the community.

Ms Keneally has 15 months to try to revive the NSW Labor Party and turn things around to avoid defeat at the March 2011 election.

Carmel Tebbutt will remain as deputy premier, giving Australia its first all-female leadership team at a state or federal level.

Ms Keneally thanked Mr Rees for his hard work as premier over the past 15 months and said she would talk with him about a role in her new government.

Frank Sartor, who also had aspirations to be premier, is expected to return to cabinet, but Ms Keneally has ruled out a return for her friend and factional ally, Joe Tripodi.

She also denied she owed her elevation to NSW's top political job to Mr Tripodi and Eddie Obeid, the powerbrokers of the dominant Right faction.

"I'd like to thank my colleagues for this opportunity to lead and serve the people of NSW," Ms Keneally said as she emerged victorious from the ALP party room.

Ms Keneally becomes the fourth premier of NSW in as many years after Mr Rees last year replaced Morris Iemma who in turn replaced Bob Carr.