Labor is viewing the NSW local elections as a "massive wake-up call", after voters turned their backs on the major outfits in favour of independents and minor parties.
Local government elections were held on Saturday for all but one of the state's 128 councils, with counting resuming on Monday morning.
Several councils could be lurching to the left after the Liberals failed to nominate 136 endorsed candidates, a debacle that could significantly reshape local government for the next four years.
Election analyst Ben Raue early counting showed the Libertarian Party could win as many as eight seats in NSW's 27 most populous councils.
All of them would come in councils where the Liberals had forgotten to nominate their candidates, Mr Raue wrote on his Tally Room website.
But Labor also went backwards in some regions, having lost their majority in two councils in Sydney's west while incumbent Newcastle Lord Mayor Nuatali Nelmes trailed an independent candidate.
NSW Premier Chris Minns said Labor should not dismiss the results as irrelevant at either the state or federal level, declaring them "a big win for independents and a massive wake-up call for major parties".
"There's massive pressure on households and families, and in many parts of NSW, as a result they didn't vote Labor," he said.
"We have to redouble our efforts to connect with families … when you see a big result like that, even though it's not our level of government, I hear the message loud and clear."
With a federal election expected in the first half of 2025 and Prime Minister Anthony Albanese's popularity decreasing, Mr Minns said the local results showed his party's message was not cutting through.
"Nothing's easy and nothing's free when inflation is high and interest rates are high, and you've got to fight for every vote," he said.
"Labor are good scrappers, we're good fighters, and I'm sure that's exactly what they'll do at the federal level, and that's what we want to do at the state level too."
Some candidates declared victory on Sunday, but the full results will not be announced until early October.
Postal votes can still be received until September 27, and about 1.5 million people, or one in four, opted to vote early.
The Labor party looks set for a sweeping victory in the Inner West council, securing more than 40 per cent of votes in all wards to lead in all but Stanmore, where the Greens have won 44.5 per cent so far.
Sydney Lord Mayor Clover Moore all but declared victory for a record sixth term after winning almost 37 per cent of the vote, followed by Labor on 17 per cent and the Greens on 13 per cent.
