With close to 80 per cent of the vote counted, Howard's Conservatives came in with what the Australian Broadcasting Corporation predicted will be a majority of seven seats in the Lower House of the parliament, a loss of at least 20 of their previous 41-seat majority.

Lynton Crosby, director of Howard's Liberal Party, said even the slimmest majority gave Howard a mandate.

``We will have a majority of representatives in the parliament, that's what counts. That gives us the authority and the opportunity to pursue ourplans,'' Crosby said.

But the main Opposition Labour Party said the huge erosion of support for the government denied Howard a mandate to introduce his planned tax on all goods and services, or sell the government's remaining stake in telecommunications company Telstra Corp.

The minority Democrats Party said it was on track to win five additional seats in the Senate, enough to win the balance of power. Leader Meg Lees has said the party would block the sale of Telstra and will change Howard's tax package to exempt food.

Howard claimed victory late yesterday at a rally of cheering supporters here. ``I want first and foremost to thank the Australian people for returning the government. I want to thank the Australian people for embracing a bold economic reform that is in the long-term interest of the Australian community,'' Howard said.

The win will see Howard in office to preside over the 2000 Olympics at Sydney , the centenary of Australia's federation as a nation in 2001, and the country's entry intothe new millennium.

The Labour Party led by Kim Beazley cut deep into Howard's parliamentary majority, but not enough to win. The Labour Party needed to win 27 extra electorates to form the government.

The Conservatives also held off a strong challenge from the far Right-wing One Nation Party, which attracted about eight per cent of the national vote.One Nation leader Pauline Hanson, who exploded onto the political scene about 18 months ago with proposals to freeze Asian immigration and cut welfare programmes for aborigines, appeared not to have been re-elected, calling into question the party's viability.

About 12 million registered voters cast their ballots yesterday at thousands of polling booths in public buildings, from the nation's desert outback to its tropical north and its bustling urban areas.

Howard staked his government's fate on reforms to simplify an antiquated tax structure that has been built up since the depression era of the 1930s, with the goods and services tax as the centrepiece.Voters had rejected a similar plan outright at an election in 1993.

Howard offered income tax cuts worth Australian dollars 13 billion to soften the blow of the new tax.According to the Australian Broadcasting Corporation, the new house of representatives lineup is likely to be: the Conservative coalition with 71 seats, the Labour Party with 64 seats, one independent and about 12 undecided.