It is understood Ms Plibersek made up her mind to run on Sunday after receiving support from colleagues, senior party figures and Labor members. Shadow treasurer Chris Bowen has also indicated he will throw his hat into the ring.
Mr Shorten is expected to support Ms Plibersek’s candidacy.
The shell-shocked Labor leader appeared briefly before cameras near his Melbourne home in Moonee Ponds to announce he had asked Labor’s national executive to start the process for replacing him.
He will act as interim leader until a new one is elected in what the party believes will be a contest that should only take a few weeks.
Under rules introduced by former prime minister Kevin Rudd in 2013, the Labor leadership is determined by a vote from grassroots members and the federal caucus. Both components are worth 50 per cent each.
While shocked by the result, Mr Shorten has told colleagues he is looking forward to working with his successor. He could also be given a frontbench position.
Mr Albanese narrowly lost the vote for the Labor leadership in 2013, when he and Mr Shorten competed for the top job. In announcing his candidacy on Sunday, Mr Albanese said he thought Australians knew him well, even if he was sometimes «a bit rough around the edges».
«I’m someone who can take on politics in a vigorous fashion,» he said. «What you see is what you get with me.»
Within Labor’s left faction, the battle for numbers is well under way between Mr Albanese and Ms Plibersek. One senior figure said Ms Plibersek and Chris Bowen, who has also been suggested as a replacement, were tainted by their association with the election loss.
«How do you become a change agent when you’re at the core of the problem?» the source said.
Labor’s campaign spokesman Jim Chalmers, and defence spokesman Richard Marles have been suggested as deputies for Mr Albanese and Ms Plibersek.
Mr Marles, Mr Chalmers and Labor’s environment spokesperson Tony Burke were also among the names put forward as possible contenders. But Labor sources said it would be a race between Mr Albanese and Ms Plibersek.
Mr Bowen, who has long been touted as a potential future leader, is thought to be too closely associated with Labor’s controversial tax reforms and the other candidates do not have the same public profile.
Ms Plibersek and Mr Albanese are both from the left and both from neighbouring Sydney electorates. The other candidates mooted so far are from the right.
As horrified Labor MPs and operatives woke up on Sunday, there were several hypotheses forming about why the party had lost the election it believed it was all but certain to win.
Speaking to ABC TV, Ms Plibersek suggested that the party — which had major plans for tax, childcare and healthcare and industrial relations — had bitten off more than it could chew.
«Perhaps we didn’t have enough to explain all of the benefits of it,» she said. «When you’ve got such a large agenda, it’s sometimes hard to explain all of the details to all of the people who benefit.»
Others said while Mr Shorten had been able to convince those within Labor of his policy plans, he had not been able to do the same with voters out in the community. One senior source said internally Labor saw its election platform as «big, brave and bold». Externally, it was viewed as «shifty and scary».
They said there had been «nagging doubts» over whether voters would accept Mr Shorten as a prime minister. The source described the feeling on Sunday as «bewilderment. As well as despair, despondency and depression».
Other said «scare campaigns» over franking credits, superannuation taxes and death taxes had hurt the party in the closing stages of the campaign.
Judith Ireland is a political reporter for the Sydney Morning Herald and The Age, based at Parliament House