Australia is in political limbo tonight after big swings against Labor destroyed Julia Gillard's House of Representatives majority and delivered the first hung parliament since World War II.

Labor MPs have been swept aside by swings of more than 9 per cent against them in former prime minister Kevin Rudd's home state of Queensland, and of more than 6 per cent in New South Wales.

ABC analysis now tips the Coalition to have 74 seats in the House of Representatives, with Labor on 71, four independents, and one Green.

With more than 70 per cent of the votes counted, Labor is set to lose at least 17 seats and gain only two.

As Julia Gillard and Tony Abbott pondered their next moves, Foreign Minister Stephen Smith conceded Labor could not form a majority government and Liberal Senator Nick Minchin said he still believed the Coalition was a chance to win outright.

Back from the dead

Former prime minister John Howard said Opposition Leader Tony Abbott had brought the party "back from the dead" and had "undermined and potentially destroyed a first-term Labor government".

And recriminations against Labor's campaign have already begun, with ousted Bennelong MP Maxine McKew taking aim at the party's decision to ditch Kevin Rudd only two months ago.

Ms McKew, who lost her seat to Liberal candidate and former tennis star John Alexander, lost no time in pointing to Kevin Rudd's downfall as a factor in Labor's political humiliation.

"Clearly you cannot have the removal of a Labor leader, and a prime minister, and then two months later have an election and not have that play into the outcome," she said.

Ms McKew said federal Labor's election campaign left a lot to be desired.

"There are some very big questions for the Labor Party given what has happened tonight," she said.

"We shouldn't be on a knife-edge tonight, and we shouldn't be losing colleagues all over the country."

Ms McKew said that in 2007 the party had run a professional, targeted, clear campaign and should have made more of its economic credentials this time around.

And she conceded that scepticism about the promised $2.6 billion Epping to Parramatta rail link had also been difficult to overcome.

Hung parliament

A hung parliament would be the first in Australia since 1940, when Robert Menzies' United Australia Party governed with the help of the Country Party and two independents.

Among the big winners on the night was the Greens' Adam Bandt, who snatched the inner city seat of Melbourne from Labor following outgoing finance minister Lindsay Tanner's decision to retire.

As well as Melbourne and Bennelong, Labor was expected to lose Gilmore, Macarthur, Macquarie, Bonner, Brisbane, Dawson, Denison, Dickson, Flynn, Forde, Herbert, Swan, Leichhardt and Longman to the Coalition and the Northern Territory seat of Solomon to the Country Liberal Party.

The ALP was also poised to lose the Tasmanian seat of Denison to independent Andrew Wilkie.

Tasmanian Labor Senator Nick Sherry said it was too early to say what kind of deals may be done with independent candidates.

"I think it would be a bit presumptive to assume any of the independents - what their position might be," he said. "There is appeal to Labor in some of these independents."

Twenty-year-old Wyatt Roy is set to become Australia's youngest MP, taking the south-east Queensland seat of Longman for the LNP.

Labor's Mike Kelly looked set to hang on to Eden-Monaro, the seat which has traditionally fallen to the party which will form government, while independent Warren Entsch, who retired in 2007, snatched his old northern Queensland seat of Leichhardt back from the ALP.

Liberal frontbencher Peter Dutton, who held on to his seat of Dickson, said he was still waiting to see what happened in marginal seats before speculating on how the Liberals would deal with a hung parliament.

"It's quite an incredible night," he said.

"We'll have to see in those dozen or so marginal seats what happens. I think Tony Abbott certainly deserves to be victorious tonight, but we'll wait and see."