The Victorian Liberals are on track to retain two seats in the state's southwest, but by-election polling suggests the party's primary vote has fallen 15 per cent in one electorate.
The Liberals are claiming victory for Richard Riordan in the seat of Polwarth with 60 per cent of the vote counted.
Mr Riordan leads the primary vote on 47.90 per cent, followed by Greens candidate Joe Miles on 16.95 per cent.
Opposition Leader Matthew Guy has already welcomed Mr Riordan to state parliament.
"It's pretty clear by the polling that Richard Riordan has won, and he has won handsomely," he told supporters gathered in Warrnambool.
The victory in Polwarth breaks a 27-year spell during which the state Liberals have not won a by-election.
Victorian Greens leader Greg Barber is delighted with the support his party has received in the region.
"Who said the Greens are just a city-based party?" Mr Barber said.
He described the result as a "good omen" for the growing Green vote in regional, local and federal elections.
Polwarth is one of two Liberal-held seats in Victoria's southwest being contested on Saturday.
In South-West Coast, the Liberals' Roma Britnell is leading the primary vote on 40.34 per cent with 75 per cent of the vote counted.
In the two candidate preferred vote, the Nationals' Michael Neoh sits on 40.91 per cent, while Ms Britnell leads on 59.09 per cent.
South-West Coast was vacated by former premier Denis Napthine, who captured 56.97 per cent of the primary vote in last year's state election.
Mr Guy acknowledged Dr Napthine's popularity with the electorate was a hard act to follow for a new Liberal candidate.
"From Denis Napthine leaving as one of the most popular local members in Australia, it is always going to be difficult," Mr Guy said.
"I am very confident that from the feedback we are receiving ... we can get over the line."
Ms Britnell - a former National Rural Woman of the Year - said she was prepared for a tight contest.
"It's been a hard race but I always expected it to be a hard race," she said.
Labor opted not to field candidates in the by-elections, ensuring the major challenge came from Nationals candidates and conservative independents.
Polwarth was given up by former roads minister Terry Mulder.
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