Australian Prime Minister Malcolm Turnbull's early election gamble appears to have cost his ruling Coalition heavily as initial vote-counting yesterday showed a swing towards the Labor party.
In a grim result for Mr Turnbull, the nation could be facing a hung Parliament when the final results come in early this week.
As counting continued last night, Mr Turnbull appeared likely to retain his position but the result was uncertain and he may not gain a parliamentary majority.
With about 70 per cent of votes counted, the conservative Liberal-National Coalition suffered a swing of 3 per cent - a poor result and a heavy setback for Mr Turnbull.
ABC's election analyst Antony Green last night predicted that the Coalition would win around 75 of the 150 Lower House seats, fewer than its current 90. But he said the outcome was unclear and probably would not be known until today.
Labor was on track to win 68 seats, up from 55 won in 2013.
Labor leader Bill Shorten's post- election speech came across as something of a victory speech.
"The Labor party is back," he said. "Mr Turnbull's economic programme… has been rejected by the people of Australia. Three years after the Liberals came to power in a landslide, they have lost their mandate."
Mr Turnbull last night admitted the result was in the balance but insisted he was still on track to win a majority. "I'm sure that as the results are refined and come in over the next few days with all of the counting, we will be able to form that majority government," he said.
Fighting his first election after deposing Mr Tony Abbott last September, Mr Turnbull took a gamble in May and called an early election.
But he appears to have delivered a poor result that could lead to questions about his long-term leadership, particularly among the Liberal party's conservative wing.
As the results emerged, prominent right-wing commentator Andrew Bolt posted a blog in which he called Mr Turnbull "a disaster" and urged him to resign.
Australian elections typically produce a party with a clear majority in the Lower House, which determines who forms government. A rare exception was the 2010 election, which left Labor Prime Minister Julia Gillard controlling a hung Parliament.
Mr Turnbull, a 61-year-old former investment banker, campaigned on a pledge to ensure political and economic stability and pursue growth in the technology sector. He promised large-scale cuts to business taxes over the coming four years.
"There has never been a more exciting time to vote for a stable, majority coalition government and an economic plan that secures our future," he told reporters after casting his vote yesterday.
Mr Shorten, 49, pledged to boost health and education spending and curb tax concessions for property investors. "The cuts are severe and they are real," he said yesterday, referring to the Coalition's lower health and education spending.
The Greens were last night set to win one seat and four independents were also expected to win.
Early results indicated that right-wing firebrand Pauline Hanson, who famously condemned Asian immigrants during her years as an MP in the 1990s, could make a return as an Upper House MP.
Australia has compulsory voting for citizens aged 18 and over. Some 15.7 million were registered to vote yesterday.