The result has stunned John Howard, the Australian prime minister, and may force him to ditch plans to call a federal election later this year.
Mr Howard said both his conservatives and the Labor opposition could not ignore One Nation's success. "There are clear lessons to be learnt," he said. "These include the genuine sense of vulnerability felt by many Australians during times of economic and social change."
In a warning to Mr Howard of the battle to come, Pauline Hanson, One Nation's leader, said on Saturday: "I don't think it's hit them yet. I don't think they have a clue."
Mrs Hanson was an independent MP in the federal parliament before founding One Nation in her home state of Queensland last year. She made her move after the Liberal Party, which Mr Howard leads, dropped her as a member because of her statements against non-white minorities.
Voting in the Queensland election was so close that the result may not be known for another week when all votes have been distributed under Australia's preferential system. But it appears One Nation will win 10 seats in Queensland's 89-seat parliament.
It took most of these from the ruling coalition of the Liberal and National parties, which is expected to lose office in the state to the Labor party. The Australian Broadcasting Corporation election computer predicted a Labor majority of three seats.
Even if One Nation does not hold the balance of power, the party's strong overall vote in Queensland has turned Mrs Hanson, 44, into a force to be reckoned with after being an unheard-of figure two years ago.
The divorced mother of four, who once ran a fish-and-chip shop in the Queensland town of Ipswich, yesterday predicted her party would storm the polls in the federal election, due within nine months.
But opinion polls give One Nation 9 per cent support nationally, compared with the 23 per cent it registered in the Queensland poll.
In conservative Queensland, One Nation's policy mixture of racial bigotry and agrarian socialism struck a chord with farmers and country town-dwellers who have been hit hard by economic decline and feel abandoned by the mainstream parties.
Mrs Hanson preached about taking Australia back to a world in which Australian "battlers" felt secure, a world where jobs were saved for "Australians", not immigrants, millions were not "wasted" on Aboriginal welfare, where country people could keep as many guns as they liked and tariffs were erected to protect farmers from foreign competition.
The Hanson party took almost one-quarter of the state vote largely because of the disastrous decision by the coalition parties to allocate second- preference votes to One Nation candidates, not Labor. No One Nation candidate was elected merely on primary votes.
For Mr Howard, the Queensland result is ominous. The prime minister was under fire over his failure to publicly repudiate Mrs Hanson's pronouncements on race during her rise to prominence. Then he ignored calls to take a lead and direct coalition preference votes away from One Nation.
His silence on these questions made him look as if he was more interested in picking up votes for his side of politics from a cosy preference distribution deal with One Nation. If so, it backfired spectacularly.
Barry Jones, national president of the Labor Party, said yesterday: "To some extent, the prime minister is the godfather of all this. If he'd taken a more considered position at the beginning, the situation may not have got out of hand."
Only a few weeks ago, Mr Howard had been planning to call a "double dissolution" election for both houses of federal parliament, possibly in August. The Queensland result suggests that if he did so, One Nation could win at least two seats in the Senate, the upper house of federal parliament, and possibly hold the balance of power there.
Legislation in which Mr Howard's government aims to restrict the rights of Aborigines to claim native title over outback farming lands is already blocked in the Senate, where the government does not have a majority. Mrs Hanson wants these rights ditched completely.
Les Malazar, an Aboriginal leader in Queensland, said of the election result: "It's an absolute disaster for Aboriginal people. In truth, it is also a disaster for Australia. The reconciliation between white and black Australia is going out the window."Reuse content