If she cannot, her critics will claim vindication in their portrayal of Gillard as a person of questionable trustworthiness and poor judgment. Her electoral stocks will further suffer. If she can knock the allegations into a cocked hat, Gillard will get her head above the parapet probably for the first time since the equivocal election, although she and Labor won't be out of the woods.

Until a week ago, with mixed success, Gillard employed stonewalling, indignation, intimidation and haranguing to keep her accusers mostly quarantined to internet blogging in the matter we will attempt to outline here. Last year, she scored a humiliating triumph over mainstream journalists who attempted to report suspicions against her. But she didn't count on her sacked attorney-general Robert McClelland opening old wounds about the extent of union corruption and recent corroboration from people well placed to challenge Gillard's clean-sheet approach.

As a Slater and Gordon solicitor in Melbourne, Gillard advised her then boyfriend - an Australian Workers Union rising star, Bruce Wilson - on constructing a union facade, the Australian Workers Union Workplace Reform Association, from which Wilson and his AWU sidekick Ralph Blewitt allegedly misdirected hundreds of thousands of dollars.

The association's stated purpose - at least according to a 1992 public notice - was to promote and encourage ''workplace reform'' in construction and maintenance. But it wasn't used for workplace safety and training. Gillard acknowledged this week she thought it was intended as a union leadership re-election fund where levies on union officials, and the proceeds of fund-raising dinners and so on, could be safely deposited.

In 1995, she confided to senior colleagues that the association was a ''re-election slush fund''. ''It's a common practice,'' she told them. ''Indeed, every union has what it refers to as a re-election fund, slush fund, whatever, which is the fund that the leadership team … puts money so that they can finance their next election campaign.''

On Thursday, Gillard conceded her slush fund reference, uttered in the context of a casual and jovial conversation, ''wasn't the best form of words''. ''But I'd ask people to assess the form of words in the context in which it was being used in a sentence where the description of the purpose of the association, as I understood it, is exactly the same as the description I've given you here today,'' she told journalists.

Gillard said her description was not inconsistent with workplace safety aspirations because they were key goals of the union leadership ticket.

Instead, Wilson and Blewitt extracted big deposits from construction and resource companies employing AWU members. Initially, the national AWU knew none of their activity but subsequently notified police of its suspicions and went so far as demanding a royal commission, a call that fell on deaf ears in the Keating government.

Wilson and Blewitt allegedly used the money as a sort of private bank account, buying a house in Melbourne's Fitzroy, after Wilson moved from Perth, and spending on other activities unrelated to the association's given purpose.

Wilson, who works as a part-time club cook on the mid-north coast of NSW, and Blewitt, who fled Australia for Indonesia (where he is accused of a land swindle) and Malaysia, have been investigated by police in Perth and Melbourne. Documents reveal Perth detectives wanted them charged but could not convince the builder Thiess to co-operate. Wilson and Blewitt have not been charged but the latter has told The Australian newspaper that ''sham'' transactions took place and that he will tell all in return for indemnity from prosecution. An AWU civil action against Wilson went nowhere.

Gillard claimed on Thursday her role was limited to advice and not to execution, that she did not know what improper use Wilson and Blewitt would make of the entity she helped establish, and that she severed the relationship with Wilson in 1995 when ''I became aware that I had been deceived about a series of matters''.

Much of the more salacious, zany and explicitly offensive commentary (and invention) has been restricted to internet ranting - to what Gillard called misogynists and nut jobs. That is not a description neatly befitting Peter Gordon and Nick Styant-Browne, two former senior partners at Slater and Gordon, however.

Together, they are the source - intentionally or otherwise - of much of the fresh revelation. Gillard's handling of the AWU matter angered some of her senior colleagues and she was interviewed on September 11, 1995, by Gordon and another as part of an internal investigation.

According to a transcript of the interview, Gillard conceded the renovations to her inner Melbourne home might unintentionally have benefited from the rorted union funds, although she doubted this. She provided receipts to show the renovation work was paid by her.

In a Peter Gordon-leaked draft statement, the former Slater and Gordon principal said last week the firm considered terminating Gillard's salaried partner position but accorded her the benefit of the doubt and accepted her explanations. ''Nevertheless, the partnership was extremely unhappy with Ms Gillard, considering that proper vigilance had not been observed and that [her] duties of utmost good faith to [her] partners, especially as to timely disclosure, had not been met. Ms Gillard elected to resign and we accepted her resignation without discussion.''

But a statement by Slater and Gordon's managing director Andrew Grech said Gillard took leave of absence at the time to contest unsuccessfully a Senate election and, in May 1996, resigned to become chief of staff to the then Victorian opposition leader John Brumby. Said Gillard on Thursday: ''It had long been an aspiration of mine to move to a political career so I made the determination to resign from Slater and Gordon.''