Australia's conservative leader Tony Abbott has claimed a decisive victory as voters punished the outgoing Labor government for six years of turbulent rule and for failing to maximise the benefits of a now fading mining boom.

Mr Abbott, a former boxer, Rhodes scholar and trainee priest, promised to restore political stability, cut taxes and crack down on asylum seekers arriving by boat.

"From today I declare that Australia is under new management and Australia is once more open for business," Mr Abbott told jubilant supporters in Sydney.

It was frustration with Labor's leadership turmoil that cost the government dearly at the polls.

Labor dumped Prime Minister Kevin Rudd in 2010, for Australia's first female prime minister Julia Gillard, only to reinstate Mr Rudd as leader in June 2013 in a desperate bid to stay in power.

"It is the people of Australia who determine the government and the prime minister of this country and you will punish anyone who takes you for granted," said Mr Abbott.

Mr Rudd was given a rousing welcome from dejected Labor Party supporters in his hometown of Brisbane, conceding victory and announcing he would step down as party leader.

"I know that Labor hearts are heavy across the nation tonight. I gave it my all. But it was not enough to win," Mr Rudd said, supported by his wife and family.

Labor's overall vote was its worst since 2004, when then conservative prime minister John Howard won his fourth and final term, but was not as bad as the party had feared.

Labor held on to all of its close seats in Mr Rudd's home state of Queensland, and held onto several marginal seats in western Sydney.

Election officials said with about 80% of the vote counted, Mr Abbott's Liberal-National Party coalition had won around 52.6% of the national vote, and projected it would win at least 88 seats in the 150-seat parliament.

Mr Abbott could end up with a majority of around 30 seats, ending the country's first minority government since World War II.

Labor had relied upon Independent and Greens support for the past three years.

The economy is adjusting to an end to a prolonged mining investment boom, fuelled by China's demand for its abundant natural resources.

Mr Abbott, 55, built up a strong opinion poll lead on the back of promises to rein in government spending.

He also pledged to scrap an unpopular tax on carbon emissions, and stop the flow of refugee boats arriving in Australia's northwest.

A record 1,717 candidates contested the election, including colourful mining entrepreneur Clive Palmer, and Wikileaks founder Julian Assange, who is holed up in the Ecuadorean embassy in London.

With Mr Abbott's convincing victory, much of the interest remains on the Senate, where the Greens, independents and fringe parties might still hold the balance of power and frustrate Mr Abbott's legislative agenda.

Final results in the Senate could take more than a week to determine, due to the complicated system of preferential voting and proportional representation.

Taoiseach Enda Kenny said: "I congratulate Tony Abbott on his election as Prime Minister and wish him the very best in his new and important role.

"I look forward to working closely with Prime Minister Abbott in maintaining and developing the excellent relations between our two countries and our people."

Meanwhile, thousands of Irish citizens living in Australia have been watching the election outcome closely.

The Labor Party wanted to see restrictions on the numbers coming to Australia on the '457' Visa, which is held by 12,500 Irish people.

However, Mr Abbott has promised the visa will be a mainstay of his immigration programme.

Eoin Hahessy from the University of Melbourne said most Irish would welcome the Liberal-National party's victory.

He said: "The 457 visa is one of the main gateways that Irish people use to make a new life in Australia. Tony Abbott is a strong believer in not making changes to the system, so that is good news for Irish people."