Labour Claims Australia's Poll Win
Mr Howard was bidding for a fifth term in office, but tallies indicated his Sydney seat had been lost to Labour.
Participating in elections is compulsory under Australian law and more than 13.5 million people were expected to vote.
Voters in Bennelong have elected Mr Howard in 13 consecutive elections over 33 years.
But figures from the electoral commission suggested with more than 50% of the votes counted in Bennelong, he had lost the seat to Maxine McKew, a former TV journalist.
The man he has to beat, 50-year-old former diplomat Kevin Rudd, has been out in front throughout the election campaign.
"I have to say there is a strong mood for change in Australia. People want new leadership with a positive plan for the future," he said after casting his ballot.
During the campaign, Labor sought to capitalise on the Howard administration's refusal to sign the Kyoto protocol on climate change.
Many people seemed to be simply tired of Mr Howard after 11 years of his rule and his workplace reforms appeared to have alienated the aspirational working class voters who have long supported him.
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