Australian Prime Minister Julia Gillard yesterday vowed to keep the country stable after a voter backlash produced a rare hung Parliament, raising fears of political paralysis and economic pain.

Ms Gillard, whose Labour Party slumped in elections just two months after she deposed an elected leader, said she planned to form a minority government to resolve what analysts called Australia’s biggest political crisis in decades.

“We have robust democratic institutions and processes, and as Prime Minister I will continue to provide stable and effective government... while the final votes are counted in this election,” she said.

The Welsh-born Ms Gillard, Australia’s first woman Prime Minister, was savaged in Saturday’s polls which looked certain to bring the first hung Parliament in 70 years as vote-counting went down to the wire for some marginal seats.

Her campaign was overshadowed by voter anger over Labour’s June mutiny against Kevin Rudd, who won 2007 elections by a landslide and enjoyed enduring support until his approval ratings finally dropped this year.

Labour and the opposition Liberal/National alliance were set for a dead heat of 73 seats each, falling short of the 76 needed for a majority, according to public broadcaster ABC.

Neither side conceded defeat, with Ms Gillard announcing her intention to form a government as she began talks with a handful of newly influential minority members of Parliament.

The independent MPs and one Greens lawmaker who now hold the balance of power were coy about their intentions, and one of them said the horse-trading could take days or weeks to play out.

The election campaign had promised a fascinating clash between Ms Gillard, a feisty, unwed atheist, and Mr Abbott, a married father-of-three who once trained as a priest and is nicknamed the “Mad Monk” for his colourful demeanour.

The vote delivered the country its first Aboriginal and Muslim politicians in the Lower House, and its youngest, with university student Wyatt Roy, 20, elected just hours after voting for the first time.

But voters were largely uninspired by a lacklustre campaign of small-scale promises, and responded by filing more than 600,000 spoiled ballots in a country where voting is mandatory.

Ms Gillard was hamstrung by the extraordinary dumping of Rudd and a series of damaging, Cabinet-level leaks, which added further chaos to a stumbling election campaign.

Mr Abbott meanwhile remained tightly on-message, repeatedly promising to stop asylum-seeker boats, end government waste and cut taxes, while hammering Labour’s lack of unity.