SYDNEY (AFP) - Australia's embattled conservative coalition was bracing for defeat as polls closed in a crucial by-election on Saturday (Oct 20) and analysts declared victory for a high-profile independent candidate.

The loss, if confirmed after counting finishes, would snuff out the Liberal-National coalition's one-seat parliamentary majority.

It would also be the biggest-ever swing in a by-election against a sitting government.

The by-election in the wealthy Sydney seat of Wentworth was triggered after former prime minister Malcolm Turnbull was ousted in a party coup in August - the sixth change of the country's leader in the last decade.

Mr Turnbull's successor, Mr Scott Morrison, is facing public anger about the leadership merry-go-round and constant infighting in Canberra, and could be made to pay in Wentworth, traditionally a seat held by his Liberal Party.

Just over an hour after polls closed, respected veteran analyst Antony Green of national broadcaster ABC said with about 9 per cent of the vote counted, the Liberals were facing a more than 25 per cent swing against the party.

The benefactor was doctor and independent candidate Kerryn Phelps, who capitalised on the voter discontent.

"I think we can say that Kerryn Phelps will win the Wentworth by-election and this has been a pretty bad result for the Liberal Party," Mr Green said.

The Liberal-National coalition has a one-seat parliamentary majority, and a loss in Wentworth would transform it into a minority government, effectively turning Mr Morrison into a lame duck prime minister.

Voting is compulsory in Australia, but the buzz around the polling stations was unusual for Wentworth, with dozens of volunteers from different parties inundating voters with leaflets for their candidates.

"I've done over 20 elections and this is the first time at eight o'clock (in the morning) we've had a queue," Liberal Party volunteer Kevin Berry told national broadcaster ABC.

"It's quite extraordinary the level of interest in the election this time around. I think the quality of the candidates is significant and the event itself is quite significant."

Counting started after polls closed at 0700 GMT, but a tight race could see a result declared only on Sunday or later, an election official said.

FRUSTRATED VOTERS

Wentworth resident Roslyn Taylor said she was frustrated with politicians and the chaos that has plagued the main parties in recent years.

"None of them have really got their mind on the job. None of them have got their mind on the people - the true needs of the people in terms of education, in terms of health," she told AFP outside a polling booth at Bondi Beach.

The sprawling Sydney constituency takes in the famous beach as well as the haunts of stars like Russell Crowe and Hugh Jackman.

While the seat was easily held by Mr Turnbull, polls before the by-election were pointing to defeat for the Liberal Party's Dave Sharma.

"I'm hearing from the people in Wentworth that they are ready for change," Ms Phelps told ABC on Saturday.

However, she added: "I don't think anyone can afford to be overly confident because we don't know what the outcome will be."

A defeat would prove hugely embarrassing to Mr Morrison, who even floated the idea of moving the Australian embassy in Israel from Tel Aviv to Jerusalem - upending decades of Australian foreign policy - in a bid to woo Wentworth's Jewish voters.

Despite the efforts of party heavyweights to ramp up support for Mr Sharma before polls closed, Mr Morrison appeared resigned to a defeat.

"The events of a couple of months ago would have caused a great deal of anger and outrage here in Wentworth," Mr Morrison told reporters on Friday of Mr Turnbull's removal.

"I know, I was in the Parliament."