New South Wales Labor premier Kristina Keneally has conceded defeat after the party suffered a "massacre" at the hands of voters.
There has been a swing of nearly 17% against Labor, which lost dozens of formerly safe seats across its heartland as voters ended its 16-year rule.
Western Sydney is described by the ABC as a Labor wasteland.
Labor also lost seats in its traditional strongholds of the Hunter Valley and Illawarra.
The biggest swing away from Labor was about 36% in Bathurst.
Ms Keneally retained her seat, but will step down as Labor leader.
The Coalition is expected to have 68 seats in the state's lower house, against 22 for Labor.
Forty seven seats are required for victory.
Incoming Premier Barry O'Farrell has promised New South Wales voters a "limitless future".
Mr O'Farrell said the victory was beyond his wildest dreams and a win for everyone who wanted to make New South Wales number one again.
He has promised the voters he won't let them down.
Ms Keneally says Labor must face the loss honestly. She says the party worked hard, but voters were sick of its disunity.