The comedian labelled Australians "English rednecks" during an appearance on the Late Show with David Letterman earlier this week, which led to Rudd hitting back at Williams yesterday.
However, the Mrs. Doubtfire star has now laughed off the spat, taking a subtle dig at Rudd in the process by referring to the PM's infamous exotic dance club visit in 2003, which caused controversy when it later came to light in 2007.
Speaking to Australian radio DJs Hamish and Andy, he said: "I was just there for two weeks. Every time I've been in Australia it's been wonderful. I love it down there.
"Mr Rudd, I apologise. It's linguistics. I would like to modify my terminology and say, 'English good old boy', [instead of, 'English rednecks'.
"If the term redneck is offensive, forgive me, sir. Please let me come back to Australia without a cavity search, and if not, I'd love to go to a strip club with you in New York."