Australia set for hung parliament

• Opposition leader Tony Abbott has pushed Julia Gillard all the way. Pic: Getty

Senior strategists on both sides conceded it was unlikely that either the opposition coalition or Labor would be able to secure the 76-seat majority needed to govern outright.

Prime minister Julia Gillard, who became Australia's first female prime minister after an internal coup just two months ago, told the party faithful last night that the election was too close to call.

Quoting former US president Bill Clinton, she said: "The people have spoken, but it is going to take a little while to determine exactly what they have said."

It could take more than a week to learn who will govern Australia after a cliffhanger election - the closest in nearly 50 years - and the winner may have to woo independents in order to assume power.

Gillard, who was born in Wales but moved to Australia as a child in 1966, said she will remain the nation's caretaker leader during the "anxious days ahead" as vote counting continues. She wasted no time in beginning her sales pitch to the independents and the Greens.

"I will continue to provide strong and stable government until the outcome of the election is known," she said.

Meanwhile, Tony Abbott, leader of the opposition and of the Liberal Party, which dominates the coalition, said he would be negotiating with the independents to try to form a government.

"We stand ready to govern and we stand ready to offer the Australian people stable, predictable and competent government," he told supporters at Liberal campaign headquarters in Sydney.

Two independents, Rob Oakeshott and Tony Windsor, said they would side with whichever party could provide the most stable government. A third independent, Bob Katter, said he would lend support to the side that pledges the best deal for his constituents. All three are former members of conservative parties.

Norman Abjorensen, an Australian National University political scientist, said the most likely outcome would be an unstable minority government led by Abbott and supported by independents. He and other analysts predicted the final count would give Abbott's coalition 73 seats - one more than Labor.

The Australian Electoral Commission website said last night that centre-left Labor and the conservative Liberal Party-led coalition each had 71 seats, meaning neither could achieve the 76-seat majority.

Analysts said Australia's major foreign policy positions, including its deployment of 1,550 troops to Afghanistan, would be unaffected by whichever party wins because both hold similar views.Domestic issues vary across the large and diverse country, on topics such as asylum seekers, healthcare and climate change.

An Australian government has not relied on the support of independents to rule since 1942. The ranks of the independents in the 150-seat lower house rose from two at the last election to three, and could reach four this time.

Meanwhile, the Greens attracted a record number of voters, winning a seat in the House of Representatives, the lower chamber where parties form the government. The Greens were also likely to increase representation in the 76-seat upper chamber from five to nine senators, assuring the party a say on contentious legislation.

Gillard, 48, a former lawyer, came to power in a 24 June internal Labor Party coup during the first term of her predecessor Kevin Rudd, and almost immediately called elections to confirm her mandate.

Abbott, 52, a married former Roman Catholic seminarian, barely gained the endorsement eight months ago of his Liberal Party, which has led Australia for most of the past 60 years.

Labor swept to power at the 2007 elections after 11 years in opposition with almost 53 per cent of the vote, but public support has dipped below 50 per cent in recent months.

Australians have not dumped a first-term government since 1931 when a Labor administration paid the ultimate price for the Great Depression.

Gillard seized the helm of her party from Rudd after a series of poor opinion polls. She acknowledged before voting closed that Labor could lose its eight-seat majority in the House of Representatives.

The decision by Labor power-brokers to support Gillard - widely regarded as a better communicator than Rudd - cost the party the traditional incumbent's advantage.

One of those power-brokers, Paul Howse, yesterday said the decision was correct despite the loss of Labor votes.

"I think the parliamentary party made the right decision," Howse said. "Labor would have in fact done worse under a different leadership."

However, not all party members agreed.

One high-profile Labor MP, Maxine McKew, who took former Liberal prime minister John Howard's seat of Bennelong in the 2007 election, but was ousted last night, said the party had a lot of questions to ask itself. "We shouldn't be on a knife-edge and we shouldn't be losing colleagues," she said.

"You cannot have the removal of a Labor leader and a prime minister and then two months later have an election and not have that play into the outcome."

Abbott - whose socially conservative views alienate many women voters, but whose supporters say he can better empathise with Australian families - is his party's third choice as leader since Prime Minister John Howard led it to defeat in 2007. Abbott beat his predecessor by a single vote last December in a party ballot.Abbott has long been seen as a gaffe-prone fitness enthusiast who is often lampooned in the media over the many images of him clad in Lycra cycling and swimming wear.