Victorian Labor is set to retain Daniel Andrews' seat of Mulgrave despite a significant swing against the state government in the former premier's seat.
With more than 75 per cent of the vote counted, Dandenong mayor Eden Foster leads with more than 40 per cent of the primary vote in Saturday's by-election, which is down 10.9 percentage points from Mr Andrews' showing at last year's state poll.
Among the nine candidates facing Ms Foster, Liberal candidate Courtney Mann has 22 per cent first-preference votes and high-profile independent Ian Cook has 19 per cent.
At 11.45pm AEDT on Saturday, Ms Foster led Mr Cook 56 per cent to 44 per cent on a two-candidate preferred basis.
Ms Foster suffered a cut into the healthy 10.2 per cent margin left by Mr Andrews, who was the local member for more than 20 years.
Premier Jacinta Allan joined Ms Foster and the Labor faithful to celebrate the result, but conceded "we knew it was going to a big fight" to retain the seat.
Among the challenges were issues such as cost of living pressures but she said voters stuck with Labor because "they know that Labor delivers".
The Liberals conceded defeat on Saturday night, with Opposition Leader John Pesutto praising the party's increase in the primary vote.
He said the people of Mulgrave had sent a strong message to the premier that they were "tired of her taxes, waste and mismanagement. They are tired of Labor doing nothing to address the rising cost of living".
Saturday marked the second Victorian state by-election this year after the Liberals retained the seat of Warrandyte in Melbourne's northeast following the retirement of veteran MP Ryan Smith.
Labor did not contest the Warrandyte poll.
