Increasing its majority in parliament with a resounding victory, Labor has gained a second term in office with large swings across marginal electorates and in former Liberal heartland seats.
With 71 per cent of the vote counted, Labor has won 85 seats with the coalition going backwards to sit on 37 seats, while 18 seats remain in doubt.
Among the significant wins for Labor was Peter Dutton's electorate of Dickson, as he became the first opposition leader to lose his seat at an election.
Treasurer Jim Chalmers said Mr Albanese will go down in history as a Labor hero following the result.
"This was beyond even our most optimistic expectations," he told ABC's Insiders program on Sunday.
"It was a history-making night, it was one for the ages.
"This victory does come as well with healthy helpings of humility, because we know that there are a lot of challenges to address in our economy."
With expanded numbers in the House of Representatives, Dr Chalmers said Labor was able to implement its "ambitious" agenda.
"One of the reasons why we got this big majority last night is because people recognise that if you wanted stability while the global economy was going crazy, then a majority Labor government was the best way to deliver that," he said.
The coalition crashed to its lowest-ever primary vote and could record a historic low number of seats, resulting in party soul-searching as the Liberals begin the process of electing a new leader.
Liberal Keith Wolahan, who is on track to lose his Victorian seat of Menzies after one term, said the party needed to rebuild.
"It was clear our party has an issue in urban Australia, which is where most people live ... so we need to turn our mind to that like we have never done before," he said.
"We need to really dig deep and think about who we are and who we fight for and who makes up Australia."
Nationals leader David Littleproud said Labor had run the stronger campaign, which made it hard to prosecute the case for a coalition government.
"They ran a campaign where, effectively, they destroyed the character of Peter Dutton, that he became effectively unelectable, not only his own seat, but across the country," he told Sky News.
The outgoing Liberal leader said he would take full responsibility for the election loss as the coalition looks to rebuild.
"We didn't do well enough during this campaign, that much is obvious," Mr Dutton told party supporters in Brisbane on Saturday.
"There are good members, good candidates, who have lost their seats or their ambition and I'm sorry for that."
Mr Wolahan said the impact of US President Donald Trump's policies had also cost the coalition votes.
Labor senator Don Farrell said Mr Albanese had run a flawless election campaign.
"(Voters) saw that the prime minister had a vision for this country, he was looking forward, whereas the Liberals were looking backwards," he said.
Independents also enjoyed strong results, with "teal" candidates poised to expand their foothold with Nicole Boele ahead in the formerly Liberal-held Sydney seat of Bradfield.
But Saturday's election saw the Greens go backwards, recording a slight fall in primary votes and the likely loss of at least two of its Brisbane seats.
Party leader Adam Bandt also suffered a significant swing against him in his seat of Melbourne, although he was slightly ahead of his Labor challenger in the count.
World leaders congratulated Mr Albanese on his election victory, with UK Prime Minister Keir Starmer, Ukraine President Volodymyr Zelenskiy and US Secretary of State Marco Rubio among those sending well-wishes.
with Reuters
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