Labor supporters are celebrating as the numbers point to a big swing to Daniel Andrew's party.
The Victorian Labor government has made big inroads into the traditionally Liberal territory in eastern Melbourne, helping it secure a solid victory in the state election.
ABC election analyst Antony Green says the government of Daniel Andrews will be returned for a second term with an increased majority
He says there's a significant swing to Labor of around 5.4 per cent on a two- party preferred basis and a lot of the change is in the eastern suburbs.
Labor has been given 51 seats - six more than the 45 it had going into Saturday's election. Source: AAP
"In other words, if the Liberal Party vote is collapsing in eastern Melbourne the Liberal Party can't win this election. This may actually be a very big result for Labor," he said.
Labor secures 51 seats
As of 7.45pm, Labor has been given 51 seats - six more than the 45 it had going into Saturday's election. It will give the government a comfortable majority in the 88-seat parliament for its second term.
The Liberal-National coalition will struggle to get close to the 37 seats it held going into Saturday's election, with only 16 confirmed so far.
Health Minister Jill Hennessy said Labor was doing well in areas it did not usually perform in and in the Melbourne sandbelt seats.
"This is looking like a bloodbath," she told the ABC after Green called the election.
The Greens, which were angling to form minority government with Labor, will not have a kingmaker role.
Liberal frontbencher John Pesutto was pessimistic and resigned to a loss, and said it was not just an issue for leader Matthew Guy.
"He had a team around it. I was part of it. We all have to stand together on this whatever the ultimate result is," he told the ABC.
Federal Liberal party blamed
Some of the blame was also being sheeted home to the turmoil in the federal Liberal party.
Counting started with the close of polls at 6pm.
For the first time, pre-poll votes are being counted on election night alongside those cast at 1795 polling centres on Saturday.
A total of 4.1 million people were enrolled to vote.
The Victorian Election Commission is aiming to count up to 75 per cent of first preference votes on Saturday night.
Lower house seats before election
Labor 45
Liberals 30
Nationals 7
Greens 3
Independents 3
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