The Liberals claimed victory in the Mornington Peninsula seat of Nepean, a key Victorian by-election seen as a preview of what to expect when the rest of the state hits the polls in November.
The governing Labor party did not field a candidate and the Victorian Electoral Commission was initially running the two-candidate vote as a race between Liberal Anthony Marsh and independent Tracee Hutchison.
As of Sunday morning, Mr Marsh had 38.5 per cent of the primary vote and 63.4 per cent on a two-candidate basis.
Despite the win, the seat returned a large swing against the Liberal Party of 9.6 per cent with One Nation's Darren Hercus picking up a significant portion of votes.
Mr Hercus secured 24.6 per cent of the primary vote, while Ms Hutchinson clinched 21.2 per cent.
While celebrating the win, Opposition Leader Jess Wilson noted there were challenges ahead for the party at the upcoming state election.Â
"I don't think there's any denying the fact that we have a very fragmented electorate at the moment and we're seeing people look beyond major parties," she told reporters.
"(Voters) believed this was a by-election where they could take a free kick because they want to send the major parties a message that they want us to listen to them.
"We've seen a drop in the primary vote, I'm not pretending otherwise, (and) we've got lessons to learn from that."
Mr Marsh described the by-election as a "weird contest" because Labor did not run a candidate.
"We know people are frustrated, but the win shows that also they see that there is a viable alternative going into November," he said.
The ability of One Nation to attract a large portion of the vote showed the Liberals could not govern without them, Victorian Premier Jacinta Allen said.
"They're going to rely on preference deals to have the support of One Nation (and) Victorians can't afford that," she said.
Federal Liberal frontbencher Claire Chandler praised her state colleagues for securing the seat, saying it showed there was momentum for the party going into the November state election.
But she was quick to temper expectations for Saturday's by-election in the federal seat of Farrer, held for the Liberal Party by former opposition leader Sussan Ley for 25 years before her resignation.
The by-election is shaping as a four-way contest between the Liberal, National, One Nation and independent candidates.
"Every by-election is different, the issues that will be playing out in Farrer will be very different to the issues that are playing out in Nepean," Senator Chandler told Sky News.
The Liberals have held Nepean for all but one term over the past 40 years. The by-election was triggered by the resignation of former deputy party leader Sam Groth in February.
