The exit poll result was announced half-an-hour before the first polling booths closed on the east coast of Australia and two-and-a-half hours before voting was due to end on the west coast.

Howard, 68, has trailed in opinion polls all year with some forecasting a landslide victory for Labor, but surveys in the final days of the campaign said the contest was close.

Glimmer of hope

Howard is a close ally of George Bush, the US president and has made a commitment to keep Australian troops in Iraq if re-elected.

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He has also offered voters $29 billion in tax cuts, but few new policies.

In contrast, the Labor leader Rudd has pledged to withdraw combat troops from Iraq and sign the Kyoto Protocol on global warming.

The 50-year-old former diplomat who speaks Mandarin would also be expected to forge closer ties with China and other Asian nations. 

Dan Nolan, Al Jazeera's correspondent in Sydney, said that Rudd and his Labor party had run a strong campaign and there have been comparisons with Tony Blair's campaign that ended a long period of conservative rule in the UK in the 1990s.

'Old and tired'

"If Howard does secure a come-from-behind victory it will not be because of his campaigning skills but because Australians do not want to change the government when the economy is going so well," he said. 

Howard has made a commitment to keep
Australian troops in Iraq if re-elected

Labor needs to win an extra 16 seats to take office and both Howard and Rudd say the election will be very close, possibly decided in a handful of marginal seats.

Howard once described himself as "Lazarus with a triple bypass" for his ability to be resurrected from political defeat.

But he could also face the humiliation of losing his parliamentary seat of 33-years after new constituency boundaries turned his Sydney stronghold into a marginal seat.

Rudd, 50, is offering voters a generational change, saying Howard is too old and tired to lead Australia.

"I offer Australia new leadership for the future, a positive plan for the future because Mr Howard's government's best days now lay behind it," Rudd said on Friday.

"Mr Howard has gone stale in his government's approach to the future."

13.5 million people are eligible to vote from Australia's remote outback to the Antarctic.