Victorian Premier John Brumby has conceded the government needs to act quickly on several key issues following a large swing against the Labor party in Saturday's by-election.
Labor candidate Jill Hennessy retained the Altona seat for the party, but a 12 per cent swing away from Labor was the first sign the government could have a battle on its hands at November's state election.
Ms Hennessy polled almost 58 per cent of the two-party preferred vote with about 85 per cent of the overall votes counted.
The Liberal Party's Mark Rose polled 42 per cent on a two-party preferred basis.
Premier John Brumby said the result shows voters are satisfied with the government's track record on jobs and investment in schools, but also sends a message that more needs to be done to improve public transport and reduce alcohol-fuelled violence.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
He said the public wants results, and fast.
"My one message is that we will push ahead faster and we will get the results," he said.
He welcomed Ms Hennessy to parliament, saying she's "a person of great ability" who will be part of the renewal of the Labor Party.
The opposition, meanwhile, said Saturday's result shows voters are fed up with the government.
Ms Hennessy triumphed over a field of eight candidates, which included The Greens, Socialist Alliance and four independents.
The by-election was triggered after the shock resignation of former transport minister Lynne Kosky on January 18.
