The 60-page review by Labor veterans Greg Combet and Lenda Oshalem dissected the party's campaign, policy offerings and results.
It made 27 recommendations to establish a 'long-term, progressive Labor government'.
The review found Scott Morrison's unpopularity was "the single most significant factor in Labor's victory", but also identified a number of internal shortcomings.
This included former Labor frontbencher Kristina Keneally being parachuted into the western Sydney seat of Fowler, with the review saying trust in the community needed to be rebuilt.
Independent Dai Le won the seat with an 18.5 per cent swing away from Labor, flipping the seat for the first time in its history.
While an anti-major party sentiment from harsh lockdowns also attributed to the swing, Labor admitted its campaign and candidate needed to be more attuned to local issues.
The review recommended a "considered approach" when selecting the next candidate as well as consistent campaigning to rebuild trust and support.
Further holes that need to be patched include a historically low primary vote, an underwhelming performance in Queensland and Tasmania and negative swings in outer Melbourne and Sydney electorates.
The review noted parts of Sydney and Melbourne had a greater distrust in government after strict COVID-19 lockdowns, which made voters "generally angrier and more frustrated with the major parties as a result".
It found Labor needs to be more attuned to the needs of local families and workers in order to stave off the risk of a well-resourced, grassroots campaign by independents.
The review set down markers for three-way contests with Liberals and the Greens in order to win back seats and increase the party's numbers in the Senate.
The review said Greens' voters wanted to send a message to major parties about the importance of the environment.
"Supporters often acknowledged that the Greens would be ineffective amateurs if they held any real power but voted for Green candidates regardless," the party review said.
"Labor needs to call out the reckless policies and hollow rhetoric of third parties and communicate the risk of voting for a third party to voters in three-cornered contests."
The review recommended better selling Labor climate policies and highlighted the need to strike a chord with both city and regional voters "by demonstrating emissions reductions and job security/economic growth are not mutually exclusive".
