An independent MP said today he would back the Labour Party to form an Australian minority government.
Andrew Wilkie’s decision gives the party control of 74 seats in 150-seat House of Representatives – two short of a majority.
It also gives the party a single seat advantage over the conservative Liberal Party-led coalition with a bloc of three independents yet to announce which major party they will support.
If neither party can strike a deal with independents to achieve a 76-seat majority, Australians will return to the polls.
Labour has formed a caretaker government since the August 21 election failed to deliver any party a majority.
The move by Mr Wilkie edges prime minister Julia Gillard closer to retaining power in Australia.
Her centre-left Labour Party could form Australia’s first minority government in almost seven decades.
The three independent kingmakers will decide whether Labour governs for a second three-year term or whether a conservative Liberal Party-led coalition forms the next administration.
The conservative coalition needs the backing of all three uncommitted independents to reach a 76-seat majority in the 150-seat House of Representatives while Labour needs only two.
Mr Wilkie said: “I have judged that it is in fact the ALP that best meets my criteria that the next government must be stable, must be competent and must be ethical.”
He said he expects his fellow independents are now more likely to support Labour after new figures showed the coalition had overstated savings from their election promises by up to 10.6 billion Australian dollars.
Liberal leader Tony Abbott said his coalition has the best economic credentials to govern despite the figures released by the three independents.
Senior Liberal figures have stuck by the accuracy of their figures and explained that the discrepancies with official calculations by government ministries were “a difference of opinion” on methodology and underlying assumptions such as future interest rates.
Mr Abbott said the discrepancies did not compromise his negotiations with the three non-aligned legislators.