THE federal Liberal-National coalition is likely to govern with a majority of at least 30 seats after a swing of just over three per cent against Labor.
The ALP has become the first two-term federal government to be thrown out of office since Gough Whitlam's regime in 1975.
Tony Abbott's coalition is on track to pick up 90 seats, with Labor holding 57, in the 150-seat parliament, but it won't have a majority in the Senate.
By 9.30pm (AEST), the coalition was ahead in 8 seats and Labor was ahead in 54, with 10 not yet determined.
The other MPs will be Australian Greens deputy leader Adam Bandt, independent Bob Katter who will hold his north Queensland seat of Kennedy, and Andrew Wilkie who's been returned in his Tasmania seat of Denison.
Labor's worst result was in Tasmania, where it suffered a 10 per cent swing and will hold only one of its four seats.
Concerted campaigning in western Sydney appears to have paid off for Labor, with the NSW statewide swing against it down to three per cent.
Despite concerns about a voter backlash in Mr Rudd's home state of Queensland, six Labor seats were likely holds and two were in doubt.
A swing of almost five per cent in Victoria reversed all the gains made in the 2010 election.
In Western Australia and South Australia, Labor suffered a swing of just over five per cent.
One of the biggest surprises of election night was the Palmer United Party.
It picked up 5.7 per cent of the primary vote nationally and appeared on track to put former rugby league star Glenn Lazarus into the Senate for Queensland.
Of the 40 Senate spots up for grabs, the coalition was on track to win 20, with Labor holding 14 and six going to crossbenchers.
Former treasurer Chris Bowen, who held his western Sydney seat of McMahon, said there were still "strong building blocks" in place for Labor to fight back.
"Compared to what we may have faced six or 12 months ago, it's a result which I think will stand us in good stead for the next three years," Mr Bowen said.
Mr Bowen declined to say whether he would run for the Labor leadership.
Liberal Joe Hockey, who will replace Mr Bowen as treasurer, said it had been the worst result for Labor since 1910.
"Our duty to the nation is to be a formidable government led by a formidable prime minister," Mr Hockey said.
"We will deliver a strong economy, and we will get rid of the carbon tax, the mining tax, we will stop the boats."
Labor frontbencher Tony Burke said bringing Mr Rudd back as prime minister and dumping Julia Gillard in June clearly had improved the party's vote, but the infighting had been fatal.
"My view on all of this is the instability that we've seen - and all of us including me have been part of it - must end," Mr Burke said.
He called on Labor to defend its legacy.
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