SYDNEY (AFP) - Prime Minister John Howard swept his conservative government to an unexpectedly big reelection win as Australia's booming economy drowned out criticism of his staunch support for the US-led war in Iraq.
Most opinion polls had forecast a tight race between Howard's Liberal-National coalition and a resurgent Labor Party under its brash new leader, Mark Latham, 43.
But computer predictions of Saturday's election result showed the government won an historic fourth consecutive term in office with a gain of at least two and as many as five seats in the 150-member House of Representatives, where the coalition had held 82 seats.
Labor was predicted to lose four seats to 60, with the three remaining held by independents.
More importantly, the government looked set to gain ground in the 76-member upper house Senate, where Labor and its allies have held a majority and blocked key Howard legislative initiatives, like the full privatisation of telecommunications giant Telstra.
Media analysts suggested the coalition could win an outright Senate majority of 39 or fall just one short, making legislative deals with independents easier. Full Senate results will not be known before Sunday.
Howard, 65 and facing forced retirement in the event of defeat Saturday, was ebullient in victory.
"I am truly humbled by this extraordinary expression of confidence in the leadership of this great nation by the coalition," he told cheering supporters at a Sydney hotel.
"This nation stands on the threshold of a new era of great achievement," he said, calling the victory "a truly historic achievement" because it was the first in some 40 years that a government had expanded its majority in two successive elections.
Latham, who only took over the Labor 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 for "middle Australia" and make another bid for power in 2007.
"We wanted to support opportunity for the Australian people and we'll continue to advance our belief and our policies in the parliament in the coming three years," 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 W 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.
"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 like education, health care and interest rates -- a key 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 Labor/Green experiment," Howard told voters at a polling station Saturday, referring to the left-leaning Greens who have allied themselves with Labor for the election.
Labor 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 Labor so they gave John Howard another three years," said Wayne Swan, a Labor legislator.
Saturday's victory made Howard the second-longest serving prime minister in Australia's history behind Liberal Party founder Robert Menzies, although he is widely expected to retire before finishing a fourth, three-year term.