Scott Morrison's Coalition government will be unable to form a majority government, the ABC's election computer has projected.
The Liberal Party is under a lot of pressure in once-safe heartland seats, losing to so-called "teal" independents.
It remains unclear if Labor will be able to form a majority government or if Australia will have a hung parliament.
With more than a quarter of the vote counted, Labor looks to have won the seats of Chisholm, in Melbourne, and Reid, in NSW.
The ABC is also projecting former athlete turned GP Sophie Scamps becomes the first so-called "teal" independent looking likely to win.
Independents also looks set to win North Sydney and Goldstein.
ABC chief election analyst Antony Green has projected the Coalition appears unable to reach 76 seats, unless postal votes are radically different from the count as of 8:40pm.
Incumbent Liberal MP Jason Falinski’s primary vote has fallen to around 40 per cent, meaning he will not be able to win a third term in parliament.
Finance Minister Simon Birmingham said his Liberals needed to take stock from the swings it was seeing against it in once-safe seats.
"It is a clear problem that we are losing seats that are heartland seats, that have defined the Liberal Party for generations," he said.
"And so, if we lose those seats, it is not certain that we will, but there is clearly a big movement against us and there is clearly a big message in it, and we need to heed that message."
