The Liberal-National coalition is on track to hold more than 90 seats in the 150-seat House of Representatives, after a number of Labor MPs conceded the party had lost government.
By 7.15pm (AEST), one hour after voting booths closed in eastern Australia, the Rudd Labor government was looking at a national swing against the party of 3.4 per cent.
The Australian Electoral Commission has listed the Labor seats of Braddon (Tasmania), Lyons (Tasmania) and Page (NSW) as coalition wins.
Labor was listed as potentially gaining Leichhardt (Queensland) from the LNP.
Nationally, Labor was in the lead in nine seats while the LNP was leading in 19 seats, with 122 still to be determined.
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The coalition needs a net gain of just one seat to form government and two seats for an absolute majority in the lower house with its own speaker.
Labor needs a net gain of five seats to remain in power.
The coalition was tipped to pick up 14 seats in NSW, seven in Queensland, three in Victoria and one in Western Australia - which would take their numbers to 97 in the 150-seat parliament.
Prime Minister Kevin Rudd has left his Brisbane home to attend the Labor function at the Gabba.
Treasurer Chris Bowen said the coalition had won.
Former federal treasurer Peter Costello also said the coalition had won government.
"The election is over," he told the Nine Network.
"The coalition has won. It is going to be a large majority. The question is how big that majority is going to be."
In Mr Rudd's seat of Griffith in Queensland, the race was close with about 16 per cent of the vote counted.
The prime minister was polling at 41.11 per cent against LNP candidate Bill Glasson on 41.45 per cent, on a first preference basis.
But Mr Rudd also looked likely to retain Griffith, ensuring his place in the next parliament.
At the ALP election function in Brisbane the crowd cheered when they heard ABC election analyst say Mr Rudd and former treasurer Wayne Swan would hold their seats.
By 7.45pm, Mr Swan has seen a less than one per cent swing against him in his Queensland seat of Lilley.
The AEC was listing 70 seats for the coalition and 38 for Labor.
The two-party swing against Labor was about three per cent, with almost more than two million votes counted.
Senate first preference results at 7.45pm were showing the Liberal-National coalition on track to win three spots in NSW and Tasmania, and three or four in Victoria, Queensland and South Australia.
Labor was in line to hold two seats in Tasmania, one or two seats in NSW and at least one in Victoria, Queensland and South Australia.
The Liberal Democrats, who benefited from being the first box on the NSW Senate ballot paper and having a similar name to the Liberals, were coming third with 0.59 quotas, ahead of the Greens on 0.49 quotas.
The Palmer United Party was polling strongly in the Senate in Queensland, Victoria and Tasmania.
Liberal Mal Brough, who's running for the Queensland seat of Fisher, said Labor's vote in the state had collapsed and his booth workers began noticing this a couple of days ago.
"Clive Palmer threw a hell of a lot of money at this," he told the ABC.
"He had a populist message, one of money for everyone and no accountability and you know, that's obviously won some support.
"It would seem people that felt they couldn't come to the coalition could protest with Mr Palmer."
Barnaby Joyce, who quit his Queensland Senate seat to contest the seat of New England for the Nationals, said he was thrilled and humbled to be the new member for the NSW seat held by now retired independent Tony Windsor.
He says he took a big risk when he decided to quit the upper house to run for a lower house seat, but it had paid off.
"This is just such a humbling experience," he told the Seven network.
By 8pm (AEST), the AEC was listing McEwen, Dobell, Reid, Lindsay, Page, Banks, Lyons, Bass, La Trobe, Robertson, Braddon, Corangamite, Lyne, New England, Hindmarsh and Deakin as likely coalition gains.
At 8.15pm (AEST), the AEC said the coalition was leading in 77 seats.
The party that wins 76 seats can form government.
Labor had 54 seats, with 20 not determined.
The two remaining crossbenchers in the parliament are likely to be Bob Katter in Kennedy and Andrew Wilkie in Denison.
But there is speculation that Clive Palmer could claim the Queensland seat of Fairfax for his Palmer United Party (PUP).
Of the seats still to be determined, 14 are held by coalition candidates, five by Labor and one by the Greens.
But it does appear Hotham (formerly held by Simon Crean), Charlton (formerly Greg Combet) and Rankin (formerly Craig Emerson) will remain with the new Labor candidates.
Former prime minister Julia Gillard's seat of Lalor has also been retained.
The ABC is predicting the ALP will end up with 59 seats and the coalition 89.
However, there is still a change Clive Palmer could pick up Fairfax from the LNP in Queensland.
Bob Katter has retained his vast northern Queensland seat of Kennedy after a swing against him.
Almost seven million votes had been counted and the two-party swing against Labor was 3.34 per cent.
In NSW, the swing against Labor ranged up to eight per cent.
In Queensland, it was up to four per cent, in Victoria up to eight per cent and in Tasmania it was more than 10 per cent in at least two seats.
About 24 Labor-held seats hang in the balance, such as Eden-Monaro, Lingiari and Lilley.
David Bradbury conceded defeat in the western Sydney seat of Lindsay to Liberal candidate Fiona Scott, who Tony Abbott infamously described her as having sex appeal.
Labor frontbencher Bill Shorten said Labor's losses could have been worse.
"I just want to put on the record that Kevin Rudd did a very good job so far helping Labor candidates being returned," Mr Shorten told Seven Network.
Queensland Labor MP Jackie Trad told AAP the outcome so far was better than earlier predictions Labor would be left with less than 50 seats in the lower house.
