Most opinion polls had forecast a tight race between Howard's Liberal-National coalition and a resurgent Labour Party under its brash new leader, Mark Latham, 43.
But computer predictions of Saturday's election result showed the government won a fourth consecutive term in office with an even bigger majority in the 150-member House of Representatives - from 82 seats to as many as 87.
Labour was predicted to lose four seats to 60, with the three remaining held by independents.
The government also looked set to gain ground in the 76-member Senate, where Labour and its allies held a majority and have blocked key Howard legislative initiatives, including the full privatisation of telecommunications giant Telstra.
Media analysts suggested the coalition might fall just one seat short of the 39 seats needed to control the Senate, making
legislative deals with independents easier.
Howard, 65 and facing forced retirement in the event of defeat on Saturday, was ebullient in victory.
Howard called the victory a
"This nation stands on the threshold of a new era of great
achievement," he told a cheering crowd in a Sydney hotel.
"This is a truly historic achievement for our two parties," he said, noting his coalition was the first in some 40 years to have expanded its parliamentary majority in two successive elections.
Latham, who only took over the Labour Party 10 months ago and won widespread praise for setting the policy agenda during most of the six-week election campaign, vowed to fight on and make another bid for power in 2007.
"I have had a lot of people say that we have made the opposition strong and when there is a strong opposition, Australian democracy is so much stronger," he said.
Latham vowed to pull Australian
troops out of Iraq
"We'll continue to do that in the coming parliamentary term,
we'll make sure the government is held to account," he said.
Latham, a fiery activist from a working class background in
Sydney, had vowed to pull Australian troops from Iraq if he won.
His defeat by Howard will be good news for US President George Bush, who also faces a tough fight for re-election next month against Senator John Kerry, like Latham a strident critic of the US Iraq policy.
In his victory speech, Howard referred to his close alliance
with Washington in both Iraq and Afghanistan, which also held landmark elections Saturday.
"That election has been made possible by reason of the fact that a number of countries including Australia were prepared to take a stand for democracy and to take a stand against terrorism," he said.
Howard was criticised for sending
troops to Iraq
"We should be proud of the role that we have played in their
liberation, just as we should be proud of the role that Australia has played in many other areas in standing for the values we believe in and the things we hold dear," he said.
But Australia's election campaign largely ignored Iraq and
national security to focus on bread-and-butter domestic issues such as education, health care and interest rates - a significant worry for millions of homeowners.
Howard, a vastly experienced and wily politician who has overseen the most robust growth in Australia's economy in a
generation, overcame voter weariness with his taciturn style by painting Latham as a risk to prosperity.
Howard hammered away at voter concerns that Latham, who has never been a government minister, did not have the experience needed to manage the economy and would undermine economic growth and lead to higher interest rates.
"Don't risk your prosperity with a Labour/Green experiment,"
Howard told voters at a polling station Saturday, referring to the left-leaning Greens who have allied themselves with Labour for the election.
Labour leaders conceded the economy had been their downfall.
"I think you might be able to conclude that the economy (was the deciding issue), that people went into the polling booths and decided it might be a risk under Labour so they gave John Howard another three years," said Wayne Swan, a Labour legislator.