The Australian Electoral Commission has confirmed it has found 1,000 misplaced votes in favour of independent candidate Cathy McGowan for the northern Victorian seat of Indi.

Liberal frontbencher Sophie Mirabella is battling to hold on to her seat, which she held by a margin of 9 per cent in the face of a strong challenge from Ms McGowan.

The votes will see Ms McGowan's lead extended on a two-candidate preferred basis.

The votes were found at the Wangaratta pre-polling station after the AEC revealed there were 1,000 more Senate votes lodged at the station than those for the House of Representatives.

Steve Kennedy from the AEC says the votes were counted on the night but a transcription error meant they were not being included in Ms McGowan's total.

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"On the McGowan box of first preference votes, a one was put there instead of a two, so it was 1,115 rather than 2,115," he said.

"In all the confusion in the early hours of Sunday, someone has written the incorrect number.

"When that number's been transcribed onto another sheet, that's where the error's occurred.

"So the votes were always there, they were never lost, it was just an accounting error. That's why we do this recounting and rechecking."

Mr Kennedy says just before 4:00pm AEST Wednesday, Ms McGowan was leading Ms Mirabella by around 490 votes.

He says the lead should climb to around 1,500 votes once the misplaced votes are calculated in.

Ms McGowan says the votes could give her the buffer she needs to win the seat.

"It was getting really close and in this David and Goliath battle it's just lovely to get these unexpected surprises," she said.

"We expected that the numbers would tighten up one way or another, we knew that would happen, but to get 1,000 votes is really comforting."

Mrs Mirabella declined to comment on the discovery but praised those involved in the count nonetheless.

"The AEC and the scrutineers are doing the counting, so I'll leave it up to them. They're doing a good job," she said.

AEC staff will now count pre-poll, postal and absentee votes, which usually favour the incumbent.

"There won't be a declaration for, I think, two weeks," Mr Kennedy said.

"But we'll have a much clearer picture early next week when we've counted more of the postal votes and the pre-poll votes."

Meanwhile, federal Liberal backbencher Dennis Jensen has predicted Ms Mirabella will be dumped from the Government frontbench even if she is re-elected.

Prime Minister-elect Tony Abbott is this week considering the make-up of his Cabinet, and Mr Jensen expects Ms Mirabella will be dropped from the Industry portfolio.

"Being on a razor-thin margin it would make it very difficult to commit all the time required to a Cabinet position and so therefore in all probably either way Tony would be looking at potentially someone else," he said.