Malcolm Turnbull is under pressure to change tack on some of his key policies and rethink his approach to One Nation, as Labor celebrates wins in four by-elections.
With vote counting continuing on Sunday, Labor's Justine Keay, Susan Lamb and Josh Wilson - who resigned from parliament over their dual citizenship - were set to return to Canberra to represent Braddon, Longman and Fremantle.
Former Kevin Rudd staffer Patrick Gorman will become the MP for Perth, and the Centre Alliance's Rebekha Sharkie regained the South Australian seat of Mayo.
Labor framed the by-elections as a choice between "hospitals and the big banks", taking aim at the government's plan to cut taxes for Australia's biggest businesses.
Uncertainty over school funding and cuts to penalty rates were also factors at the ballot box.
Former Liberal MP Fiona Scott said the government needed to improve its campaigning on key issues such as the cost of living and how cutting business tax improves everyone's lives.
"It will require a sharpening of the messaging," she said.
However, cabinet minister Christopher Pyne said the tax cut would be presented to parliament in coming weeks.
Mr Shorten described the result as "another signpost into the destination that matters for Australians - a Labor government after the next general election".
Mr Turnbull is unlikely to call an election until close to when it is due in May 2019.
The Liberal Party declined to concede in Braddon, but candidate Brett Whiteley was not confident of getting the preferences needed to win.
Ms Lamb's win in the Queensland seat of Longman, with an expected 54.5 per cent of the two-party preferred vote, came on the back of a One Nation drain of LNP votes.
A similar swing at a general election could topple senior government figures such as Home Affairs Minister Peter Dutton.
In Braddon, Ms Keay was on 53 per cent of the two party projected vote, having won 37 per cent of the primary vote but receiving a strong flow of preferences from independent candidate Craig Garland.
Labor comfortably won Perth and Fremantle, where the Liberals did not stand candidates.
In Mayo, Ms Sharkie saw off the Liberals' Georgina Downer, who has vowed to contest the next general election.
Australian Associated Press
