Independent candidate Kerryn Phelps has claimed victory in the Wentworth by-election, on a devastating night for the Morrison Government that lost its majority in Canberra.

Key points: The Liberal Party has held the seat for decades, but their vote has collapsed

The Liberal Party has held the seat for decades, but their vote has collapsed Such was the swing to Dr Phelps, ABC election analyst Antony Green called it just over an hour into counting

Such was the swing to Dr Phelps, ABC election analyst Antony Green called it just over an hour into counting The result means the Morrison Government has lost its majority in Canberra

ABC elections analyst Antony Green called the result just over an hour after polling booths closed.

The Liberals suffered a swing of almost 20 per cent against candidate Dave Sharma.

The Liberal Party, and its predecessors, have held the eastern Sydney electorate since Federation.

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Mr Sharma won about 41 per cent of first preference votes, while Dr Phelps won about 30 per cent.

Labor's candidate Tim Murray won 11 per cent.

Wentworth by-election live results.

Dr Phelps danced with supporters at the North Bondi Surf Life Saving Club before taking the stage to claim the historic win.

"Thank you to the people of Wentworth for placing your trust in me," she said.

"I won't let you down."

She thanked her wife Jackie and the supporters of her campaign, calling it a "David and Goliath struggle".

"This win tonight should signal a return of decency, integrity and humanity to the Australian Government."

Campaign was 'bruising' for Sharma

Mr Sharma congratulated Dr Phelps and described her as "formidable".

He said Wentworth was full of "hard-working" people.

"They certainly have some strong views and they've shown them tonight," he said.

"But I respect them for doing so and they make a great contribution to Australia."

Mr Sharma described his first electoral campaign a "bruising" yet "humbling and enlightening experience".

Sorry, this video has expired Liberal candidate Dave Sharma speaks after his defeat

Prime Minister Scott Morrison said the result was not unexpected and reflected anger in the electorate following the ousting of Malcolm Turnbull in an August leadership coup.

Mr Turnbull resigned as the member for Wentworth following the spill.

"The result today is on us, the Liberals, not on Dave Sharma," Mr Morrison said.

"The Liberal Party has paid a big price tonight for the events of several months ago.

"But as a party, we will continue to rise again."

Liberal MP Trent Zimmerman admitted voter anger over Mr Turnbull's ousting was "palpable".

"It is obviously a devastating night for the Liberal Party," Mr Zimmerman said.

"Our job is to learn a message that voters in Wentworth have sent us because this is not a uniquely Wentworth message."

'Beginning of the end' for Government

Labor's Deputy Leader Tanya Plibersek said the swing against the Government was significant.

"This is historic. This is mammoth and it shows that the values of Scott Morrison are not the values of Wentworth," she said.

Ms Plibersek claimed the Labor vote was depressed because people in Wentworth wanted to "send a very strong message to Scott Morrison".

Independent Kerryn Phelps promised Wentworth voters she would not let them down. ( AAP: Chris Pavlich )

Mr Zimmerman said the result was not a reflection on Mr Sharma's campaign.

"Frankly I think Dave is one of the best candidates that we've fielded at an election for the last couple of years," he said.

Mr Murray conceded defeat about 8pm and said the party should be proud of contributing to the largest by-election swing in the history of Federal Parliament.

"This is the beginning of the end of the Morrison Government," he said.

"We did it!"

Mr Turnbull's son Alex, who had been a vocal critic of the Liberal Party during the campaign and a thorn in the side of its strategists, said the result was "incredible".

"[I am] proud of the people of Wentworth," he said in a tweet.

"A great day for Australian democracy."

Mr Morrison previously appealed to voters not to opt for an independent because it would jeopardise the Government's one-seat majority in the lower house, potentially making it difficult to pass legislation.