The Coalition has been swept to a convincing election victory in a result that could keep Labor in the political wilderness for a decade, with incoming prime minister Tony Abbott declaring the country is "under new management".
ALP seats fell across the country on Saturday, ensuring Tony Abbott will be the 28th prime minister of Australia and have a commanding majority, holding up to 90 seats in the 150 seats in the House of Representatives.
From today I declare that Australia is under new management.
Mr Abbott said he would methodically deliver on his promises with a government that accepts it will be judged more by its deeds than its words.
Under new management: Tony Abbott, surrounded by his family, claims victory. Photo: Nick Moir
"Something very significant has happened today. Today the people of Australia have declared the right to government to Australia . . . belongs to you the people of Australia.
"From today I declare that Australia is under new management."
Just before 10pm Rudd conceded defeat, saying that he would not recontest the Labor leadership and that he had fought a fight as great as the Labor Party.
ELECTION 2013: Polling day
The last day of the 2013 Federal Election, saw the country descend upon their local polling booths, to decide the nations fate. Like these photos? Go to fairfaxsyndication.com. Follow us at http://twitter.com/photosSMH Photo: Kate Geraghty
"I have been honoured to serve as your prime minister . . . but there comes a time where you know when you have given it your all.
"As Prime Minister I wish him [Tony Abbott] well now in the high office of prime minister of this country," he said.
"The things that unite us are more powerful than the things that divide us, which is why the world marvels at Australia."
On Saturday night Julia Gillard tweeted: "A tough night for Labor. But a spirited fight by Kevin, Albo, George + the whole team. My thoughts are with you all. JG'
Earlier, former home affairs minister Jason Clare, who held his western Sydney seat of Blaxland, had said it was time for Mr Rudd to go as Labor leader.
"My view is it's time for generational change," Mr Clare said. "We need to put the Rudd and the Gillard era behind us."
But western Sydney was not the complete rout there the government feared. Banks, Reid, Page and Lindsay fell early, but Michelle Rowland was returned to Greenway.
Nor was it the bloodbath in Queensland some political watchers were predicting.
Former treasurer Wayne Swan was returned to Lilley amid grave fears he would lose the seat.
The intriguing election result initially left Kevin Rudd on tenterhooks in his own Queensland electorate of Griffith. But as counting continued the outgoing prime minister appeared safe, giving rise to immediate speculation about his ambitions in opposition.
Former One Nation leader Pauline Hanson was also set to return to parliament – this time in the Senate.
Billionaire Clive Palmer looks set to enter Parliament with a possible win in the Queensland seat of Fairfax, vacated by retiring Liberal MP Alex Somlyay.
ABC political analyst Antony Green called the election for the Liberal-Nationals Coalition at 7pm.
"I think we can safely say the government is defeated," he said.
He was joined by a host of Labor ministers conceding defeat early. Treasurer Chris Bowen, who looked likely to be returned to his seat of McMahon, was the most senior government minister to concede defeat for the ALP.
Shortly after the polls closed, retiring defence minister Stephen Smith made a similar prediction saying: "The government will be defeated tonight."
Former health minister Tanya Plibersek said it was disappointing that Labor had been distracted by its divisions from its vision for the nation.
The seat of Eden-Monaro in NSW looked likely to lose its litmus test status, with Labor's Mike Kelly on track to retain the seat.
Late on Saturday, the Coalition had won more than 80 seats, Labor 53 and Greens one, with the remainder undecided.
And Nationals' maverick Barnaby Joyce made a successful transition from the Senate by winning the NSW seat of New England vacated by retiring independent Tony Windsor.
Deputy Greens leader Adam Bandt looked increasingly like clinging onto his seat of Melbourne, and Tasmanian independent Andrew Wilkie was returned in Denison.
Mr Rudd's star Queensland candidate in Forde, Peter Beattie was well behind in early counting.
"I would put it in the political category of bloody difficult," he said on Saturday night about his chances of winning the seat.
LNP star candidate Mal Brough looked headed for a comfortable win in the Queensland seat of Fisher, currently held by former speaker Peter Slipper.
Early results from Tasmania, where Labor lost Bass, Braddon and Lyons, however, was a sign of things to come for Labor as counting continued in booths around the nation.
In Perth, Labor candidate Alannah MacTiernan, replacing retiring Defence Minster Stephen Smith, was expected to comfortably win the WA seat.
Early results indicated a 4 per cent swing against Labor nationally, up to 11.1 per cent in Tasmania.
It brings to dramatic conclusion the Labor fairytale that began in 2007 when Mr Rudd led his party to an 83-seat victory.