The Bill Shorten era is over.
Labor will now pick a new leader to take on the returned coalition government.
After losing two elections in a row, Mr Shorten revealed he is stepping down as the party's leader.
Senior frontbencher Anthony Albanese will run for the leadership but other potential contenders include deputy leader Tanya Plibersek and shadow treasurer Chris Bowen.
"While I intend to continue to serve as the member for Maribyrnong, I will not be a candidate in the next Labor leadership ballot," Mr Shorten told the Labor crowd in Melbourne on Saturday night.
Mr Albanese ran against Mr Shorten for the leadership in 2013 after Tony Abbott defeated Kevin Rudd. He won the grassroots vote at the time but did not succeed in getting enough caucus support.
On Saturday night, the NSW MP said the whole Labor team had worked hard.
"As part of that team I must accept, as we must collectively, responsibility for the fact that the many people who rely upon us will be disappointed that the outcome tonight is uncertain," Mr Albanese said.
"But what I am absolutely convinced about, and have been convinced about since I joined our great party when I was still at school, is that this movement is much bigger than any individual."
Mr Bowen, who is from Labor's NSW Right faction, said he would talk to his family before deciding whether to run for the leadership.
A Nine poll taken on Saturday found 50.4 per cent support for Mr Albanese, with 39.2 per cent backing Ms Plibersek and 10.4 per cent in favour of Mr Bowen.
Victorian Labor MP Richard Marles would not say if he would put his hand up for the top job.
The shock election result defied every poll in the lead-up to the election, with Mr Shorten expressing confidence on Friday that he could form a majority government.
Instead Labor lost seats in Tasmania, NSW and Queensland, nullifying the gains the party made in Victoria.
"Labor's next victory will belong to our next leader and I'm confident that victory will come at the next election," Mr Shorten said after conceding defeat.
Australian Associated Press