Gillard within two seats of forming Australia's government

Australian Prime Minister Julia Gillard won the support of a key independent MP Andrew Wilkie on Thursday, leaving her Labor Party within two seats of a parliamentary majority. Last month’s inconclusive election result left Labor and the National/Liberal coalition scrabbling for the support of a handful of independents and Greens.

Julia Gillard, Australia's prime minister, on 21 August REUTERS

Former Iraq war whistle-blower Wilkie said Gillard's centre-left party, which on Wednesday won the support of the lone Green MP, was most likely to deliver "stable" and "competent" government.

"I have judged that it is the Australian that best meets my criteria that the next government must be stable, must be competent and must be ethical," he told journalists in Canberra.

Wilkie's vote gives Gillard 74 seats in the 150-member lower house. She needs an absolute majority of 76.

But Tony Abbott's right-wing alliance has 73 seats and three independents are still undecided.

Wilkie, who holds a Tasmanian seat, urged the three - rural MPs Tony Windsor and Rob Oakeshott and Bob Katter - to make their move soon, following nearly two weeks of political paralysis.

They say they will begin formal negotiations on Friday.

Gillard said Wilkie's decision was smoothed by a pledge of 100 million Australian dollars (70 million euros) for a hospital in his constituency and assurances the government would try to ease gambling problems caused by "pokie" slot machines.

On Thursday, bookmakers reported a rash of bets on Gillard for next prime minister, pushing Labor past Abbott's Liberal/National coalition as favourites to form a government.