Amid an anti-Coalition backlash over rising unemployment, the East West Link, and the Abbott government, Labor has picked up at least 46 seats in the 88-seat lower house, winning the critical sandbelt electorates of Mordialloc, Carrum, and possibly Bentleigh and Frankston, while retaining seats around Ballarat, Bendigo and Geelong.

The Greens have also made history in the Victorian Parliament, with Melbourne candidate Ellen Sandell beating Labor MP Jennifer Kanis to secure the minor party's first lower house seat, while former Labor minister Richard Wynne was also under threat of losing Richmond.

Meanwhile, the upper house appears set for chaos, with Labor unable to obtain a majority and minor parties such as the Shooters and Fishers, the Country Alliance and the Greens all picking up seats.

While the final result might not be known for several days – almost one million pre-poll votes will not be counted until Monday – Dr Napthine emerged at Melbourne's Sofitel with his wife and sons shortly before 10pm to concede defeat and announce he would be stepping down as leader.

"It is time for renewal, it is time for change," Dr Napthine told the Liberal Party faithful, paving the way for an intense tussle between former treasurer Michael O'Brien and former planning minister Matthew Guy. "We will be back at the next election offering the people of Victoria a real alternative."

Minutes later, premier-elect Daniel Andrews arrived at the Mulgrave Country Club with his wife, Cath, to claim victory, declaring the win a clear rejection of the "tired, negative, politics" of the Coalition's campaign.

In a speech that was noticeably absent of any reference to the East West Link, Mr Andrews said his first tasks would be to end the "spiteful dispute" between the former government and the state's paramedics; introduce Labor's "Back to Work Act" to create new jobs; and set about removing 50 of Victoria's most dangerous level crossings.

"Work will begin tomorrow because I will not waste even a single day delivering on each of the commitments we made," he said.

"The people of Victoria have today given to us the greatest of gifts, entrusted to us the greatest of responsibilities, bestowed upon us the greatest of honours, ladies and gentleman, we will not let them down."

Saturday's victory has consigned the Coalition to becoming the first one term government in Victoria since 1955. Furthermore, Dr Napthine's long held-dream of political legitimacy – yesterday was the first time he faced the people after taking over from Mr Baillieu last year – is now all but over.

While the government was able to claw back some ground in the final 24 hours before polling day, a range of factors hindered its performance overall: the inertia of its early years, the circus surrounding Geoff Shaw, and the Coalition's response to issues such as rising unemployment and ambulance response times.

Insiders and ministers also admit public hostility towards Tony Abbott hindered the state Liberal brand, with federal budget decisions, and the Commonwealth's withdrawal from the car manufacturing industry, feeding into Labor's campaign attack slogan: "under the Liberals you're on your own."

"It was a significant," Community Services Minister Mary Wooldridge said of the Abbott factor on Saturday. "After the state budget in May, we had a very positive response in the Victorian community, but that was very quickly turned around after the federal budget. Things have continued, obviously, with petrol taxes and cuts to the ABC, things that people care about."

Federal Opposition Leader Bill Shorten – who branded Mr Andrews  a "Labor hero" – said it was no surprise the Prime Minister had stayed away in the final days before the poll.

Mr Andrews, meanwhile, ran a highly disciplined and well targeted campaign, particularly in the sandbelt seats that fell to the Coalition in 2010. It worked: with more than half the votes counted, Labor candidate Sonya Kilkenny was as on track to beat Liberal backbencher Donna Bauer in Carrum; the ALP's Tim Richardson was ahead of incumbent Lorraine Wreford in Mordialloc, while in the volatile seat of Bentleigh, Nick Staikos was ahead of Liberal incumbent Elizabeth Miller.

Further south-east in Frankston, Liberal candidate Sean Armistead was also at risk of losing to Labor, despite securing the preferences of rogue independent Geoff Shaw.

And in other surprise outcomes, Liberal MP Clem Newton-Brown was under threat from Labor in the seat of Prahran, while Nationals MP Russell Northe faced significant swings against him in Morwell, partly on the back of anger over the Hazelwood mine fire.

The Geelong regional seat of South Barwon was a tight race with Labor candidate Andy Richards saying it was "too close to call" – although the ABC gave it to Liberal incumbent Andrew Katos.

Nationals leader Peter Ryan also suggested social media had  played a part in seats like Shepparton, where independent candidate Suzanna Sheed may unexpectedly snatch the seat from the Nationals.