In the Federal Government's first electoral test, the rural Victorian seat was easily retained by the National Party, with former journalist Darren Chester gaining a swing of more than 7pc.

Voters in the State by-election of Kororoit also sent a message to Premier John Brumby, although the Labor Party held the western suburbs seat comfortably despite a swing against it of about 12pc.

In Gippsland, Labor's poor result is likely to be seen as sending a message to the Federal Government, with national issues such as petrol prices prominent during the campaign.

An emotional Mr Chester, whom party leader Warren Truss described as part of the next generation of National politicians, told supporters in Traralgon that it was an "an absolute humbling privilege and honour" to win the seat.

"It's something that I will never take for granted," he said.

Mr Truss said the result sent a clear message to Mr Rudd and his Government that they had to govern for all Australians, as they promised. Regional Australia was sick of being left out of the equation.

In a disappointing performance that will further take the gloss off Mr Rudd's Prime Ministership, the Labor candidate, Darren McCubbin, managed only 37pc of the two-party preferred vote.

On the two-party basis against Labor, the Nationals polled 63pc. The Liberals polled strongly, considering they had not contested the seat since 1987.

Brendan Nelson's candidate, hospital manager Rohan Fitzgerald, picked up 20.7pc of the vote in a result senior party sources described as credible.

Gippsland had now turned from a marginal to a safe Coalition seat, party officials said.

Gippsland, held by the Nationals since 1922, was always a tough ask for Labor, but party strategists were hoping to at least hold ground.

In the federal election, Gippsland's swing to Labor was 1.7pc, more modest than the state-wide trend. Senior Labor sources said they had been outgunned by the Nationals' advertising budget. The party had never "believed for an instant" it would win.