Outgoing Victorian Liberal MP John Pesutto has urged the party to renew itself by recruiting more women and candidates from diverse cultural backgrounds, as he concedes defeat in the previously safe seat of Hawthorn.

Key points: Mr Pesutto said the party needed to address public concerns on issues like climate change

Mr Pesutto said the party needed to address public concerns on issues like climate change While urging the party to "do a lot more" to recruit female candidates, he stopped short of endorsing gender quotas

While urging the party to "do a lot more" to recruit female candidates, he stopped short of endorsing gender quotas Mr Pesutto did not rule out a comeback saying it depended on "how events unfolded"

Mr Pesutto had been in a tight contest against Labor opponent John Kennedy since vote counting began on the night of the Victorian election.

"It does look very clear on those numbers that I can't win from here unless there's been a misplacement of votes, which I'm not suspecting there is," he told ABC Radio Melbourne's Jon Faine.

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"Short of a miracle I can't see how I could win from here."

In a series of media events today, Mr Pesutto said the party needed to make its language, policies and culture "more inclusive" so that socially progressive but economically conservative voters would feel welcome after the "rebuild".

Mr Pesutto cited his 17-year-old daughter, who went to the climate change protest in the city on Friday, as an example of the kind of Liberal supporter who wanted the party to take action on that issue.

"Even in my own family I can see the challenge we've got," he said.

"I'm concerned that there are conservative people, conservative-leaning people, and even moderate-leaning people who just want our party to do something on that front.

"There should be no-one, no-one, who can't look at the Liberal Party as a source of leadership and inspiration and optimism.

"If we are inclusive people will come back to us."

The son of Italian migrants, Mr Pesutto said he wanted the party to embrace more ethnic diversity in its ranks to better reflect the community.

Mr Pesutto first learned he was in trouble in the seat during the ABC's election broadcast. ( ABC News )

Party urged to recruit more women, diverse candidates

He also called for greater efforts to recruit more women, but stopped short of endorsing gender quotas.

"I haven't settled on that view [quotas], but what I do accept is we need to do a lot more," he said.

"Where I'm coming from is that rules only really work when you have a culture to back it up.

"I'm not saying we don't need a solution to this yesterday: we do. We need a solution to this. We don't have enough women in parliament."

Mr Pesutto also called for the party to make a greater effort to bring in candidates from diverse cultural backgrounds.

"There are people of Indian background, people of Asian background, Middle Eastern background, South American background, there are lots of people who are in the party or around the party who are reluctant to put their hand up," he said.

"We just need to do a lot more."

The party must remain unified if it is to get through the difficult post-election period, Mr Pesutto said.

"I stood with Matthew [Guy] and the whole team. We were a team," he said.

"If we're going to get through this and manage the rebuild — and we do have a massive challenge in front of us, we've lost so many seats and so many good people — we have to stick together."

Not ruling out a comeback

Mr Pesutto did not rule out a return to politics, when asked if it was possible there may be a resignation in the Upper House which could allow him to be returned on a "casual vacancy" without a byelection.

"Certainly some people have said to me in a supportive way, 'is there a way you can come back in'," he said.

"Either house might be available. If I can I'd like to do that at some point but we'll just have to see how events unfold."

Mr Pesutto said he sought advice about a recount when the count stalled with him sitting about 170 votes behind his opponent.

But he said Mr Kennedy's lead had since blown out to 329 votes.

"When you look at it in terms of the possibility that a batch of say 80 or so votes might be in the wrong pile, you want to be sure," he said.

"But now that it's about 329, I'm not sure what the VEC's going to do about that. They might say that margin if it holds is just too great."

Mr Kennedy was 173 votes in front of Mr Pesutto when counting finished yesterday and he claimed victory in a post on Twitter.

It is the first time the seat has been held by Labor since 1955.

The seat was previously held by former Liberal leader Ted Baillieu and Mr Pesutto was elected to the seat in 2014.

Mr Pesutto held the portfolio of shadow attorney-general in defeated Opposition Leader Matthew Guy's team, and went into the campaign with a margin of 8.6 per cent.

He was widely tipped as a potential candidate to take over the party leadership after Mr Guy announced he would step down.

Shadow Treasurer Michael O'Brien is expected to be a candidate when the party elects its new leader tomorrow.