Opposition Leader Bill Shorten has conceded defeat and announced he will step down as leader of the Labor party.
He confirmed he called Prime Minister Scott Morrison to congratulate him on the win.
“I know that you’re all hurting and I am too,” A disappointed Shorten said at his Labor Party function.
“And without wanting to hold out any false hope, while there are still millions of votes to count and important seats yet to be finalised, it is obvious that Labor will not be able to form the next government.”
Mr Shorten said he would remain as the member for Maribyrnong but said "I will not be a candidate in the next Labor leadership ballot”.
"Labor's next victory will belong to our next leader and I'm confident that victory will come at the next election," he said.
The Labor leader said it had been a tough campaign but Australians needed to respect the result.
He said the trade union was his life and he wished Labor could have formed government.
“I wish we could have won for the true believers, for our brothers and sisters in the mighty trade union movement,” he said.
Referring to former prime minister Bob Hawke who died on Thursday, Mr Shorten said “I wish we could have done it for Bob”.
Labor had picked up only 65 so far of the 76 needed to form a majority government, while the coalition was sitting on 74.
Prime Minister Scott Morrison will likely retain power after voters in Queensland, NSW and Tasmania rallied behind the Liberal-National Coalition.
Former prime minister John Howard said Mr Morrison "deserves the overwhelming gratitude of the Liberals all around the country”.
Mr Shorten wished Mr Morrison and his family well.
"Above all, I wished Scott Morrison good fortune and good courage in the service of our great nation," he said.
"The national interest required no less."
He urged Labor supporters to continue the fight.
"We cannot change the past but my word we can change the future,” he said.
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