The Prime Minister also moved to protect her embattled government with today's simultaneous announcements, at which she said a “line has been crossed” when it came to maintaining Australians' respect for federal parliament.
Mr Thomson, the embattled backbencher facing allegations of fraud while head of the Health Services Union, will be suspended from the Labor Party but remain in parliament as an independent.
Ms Gillard said she had also asked Peter Slipper, who is facing allegations of fraud and sexual harassment, to remain stood down as Speaker for a "further period of time".
Mr Slipper has already stood down as Speaker over the fraud allegations, but today said in a statement they had been shown to be a fabrication and "there is no longer any reason to step aside
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