Kevin Rudd has conceded defeat in the national election, making Tony Abbott the 28th Prime Minister of Australia.
The British-born opposition leader's Liberal Party-led coalition has ended six years of centre-left Labor rule.
Australia's conservative leader Abbott swept into office in a landslide election on Saturday as voters turned their backs on the Labor government after six years of turbulent rule which failed to maximise the benefits of a now fading mining boom.
With 54% of the vote counted, the Australian Electoral Commission had Abbott's party leading in 76 seats in the 150-seat House of Representatives and Labor with 55.
A majority of 76 is needed to form a government once all the votes have been counted.
ABC election analyst Antony Green said: "The coalition is on a pretty secure 74 seats already. On that basis they're going to get a majority. I think we can say the government has been defeated."
Abbott, a former boxer and trainee priest, won over the electorate on promises of political stability, lower taxes and a crackdown on asylum seekers.
"This was an election that was lost by the government more than one that was won by the opposition," former Labor prime minister Bob Hawke told Sky News.
According to Reuters, election officials said with about 65% of the vote counted, Abbott's Liberal-National Party coalition had won around 54% of the national vote, and projected it would win at least 77 seats in the 150-seat parliament.
Party analysts said Abbott would end up with a majority of around 40 seats, ending the country's first minority government since World War II. Labor had relied upon independent and Green support for the past three years.