Australian vote set to end in hung parliament

Neither party wins overall majority in knife-edge poll

Australia appears to be heading for its first hung parliament for 70 years, following yesterday's election, with neither the ruling Labor Party nor the opposition Liberal-National Coalition sure of securing a majority.

A minority government, supported by up to four independent MPs and one Green, seems the most likely scenario. However, it could take several days – possibly a fortnight – for postal and early votes to be counted, determining the outcome in the most closely fought seats. What was clear last night was that voters had turned on Labor, punishing it for its mistakes in government and for dumping its own leader, Kevin Rudd, in favour of Julia Gillard, the country's first female Prime Minister. A national swing against the party of more than 5 per cent benefited not only the conservative Coalition but the Greens; many voters were infuriated by the government's ditching of an emissions trading scheme (ETS).

The Greens won Melbourne, their first seat in the House of Representatives, and are set to hold the balance of power in the Senate, or upper house. In other history-making events, Australia's first indigenous MP, Ken Wyatt, was elected in Western Australia, while the country's youngest politician, 20-year-old Wyatt Roy, triumphed in Longman, north of Brisbane. The Greens' MP, Adam Bandt, has indicated that he will give his support to Labor. However, he will be courted in days to come by both main parties, as will the independents.

In a speech to the party faithful in Melbourne, Welsh-born Ms Gillard made a point of congratulating Mr Bandt and the three independents whose seats are assured (a fourth remained in the balance last night). She said Labor had "a good track record of working positively and productively with independents in the lower house and with Greens in the Senate".

Tony Abbott, of the Coalition, who has barely slept in recent days such was his determination to capture every last vote, warned his supporters against "premature triumphalism". But he told the crowd gathered in a Sydney hotel: "What's clear tonight is that the Labor Party has definitely lost its majority, and what that means is that the government has lost its legitimacy."

With more than three-quarters of votes counted, the Coalition had won 72 seats in the 150-seat House of Representatives, while Labor had 70. Election analysts are predicting that the Coalition will end up with 73 and Labor with 72. They say it will be virtually impossible for either party to reach the magic figure of 76, and senior Coalition and Labor figures both acknowledged last night that a hung parliament was the most likely result.

After the dramatic events that saw Mr Rudd abruptly deposed two months ago, many observers expected the election itself to be an anti-climax; instead, it was a cliffhanger. Ms Gillard, a former industrial lawyer whose family migrated from Barry when she was five, went to bed uncertain whether she would make history as Australia's first elected female leader, or as its shortest-serving PM.

Australian voters have not dismissed a government after just one term since 1931. There has not been a hung parliament here since 1940. If Mr Abbott – a fitness fanatic and a Catholic who once studied for the priesthood – heads a minority government, he will be the nation's fourth prime minister in three years. (Mr Rudd ousted John Howard in 2007.) Mr Abbott has led his own party for less than a year, after winning the leadership by just one vote.

Bizarrely, Labor bled support despite guiding Australia through the global financial crisis – the only developed nation to emerge relatively unscathed. One of its defeated MPs, Maxine McKew, said last night that the party should have focused more on its economic achievements during the campaign. A former television journalist, Ms McKew was the Labor hero of the last election, defeating Mr Howard in his own constituency, Bennelong; he was the first prime minister since 1929 to lose his seat. But the Liberals fielded a popular former tennis pro, John Alexander, who won Bennelong back.

Some of Labor's losses, particularly in Queensland, Mr Rudd's home state, are blamed on the brutal manner in which he was dispatched. Ms McKew, a close ally of Mr Rudd's, said: "You cannot have a Labor leader removed within two months of an election [and] it not have significant ramifications."

Mr Rudd's own party moved against him after his ratings fell following his abandonment of the ETS. He had also become embroiled in a row with the powerful mining industry over a new tax intended to spread the benefits of Australia's mineral wealth more widely. His leadership style was aloof and authoritarian. Ms Gillard, his deputy, was seen as a better communicator.

In her speech last night, Ms Gillard paraphrased Bill Clinton's words following the 2000 US election: "The people have spoken, but it's going to take a little while to determine exactly what they've said."