Mr Chester was expected to win the rural Victorian seat, which was vacated by former Minister for Agriculture, Peter McGauran after 25 years, but no-one expected to see such a big swing against Labor so soon into its first term in Government.

As the results for Gippsland rolled in on Saturday night it became clear Mr Chester had won 63pc of the two-party preferred vote and Labor's primary vote had plummeted 8.5pc.

The swing was branded a Labor "backlash" in the bush, with country people upset about the rising costs of petrol, food and living despite promises by the Prime Minister to fix them.

"The people of Gippsland have said loud and clear their concerns about household budgets, from the global oil crisis and from rising interest rates, both of which have hit the family budget hard," Mr Rudd said after Labor's loss.

It is unclear now whether Labor will even run a candidate at all in the next by-election to come along in former Foreign Minister Alexander Downer's blue-ribband Liberal seat of Mayo, in the Adelaide Hills, from which he officially retired this week.

No other party has really had a chance in Mayo since Mr Downer won the seat 16 years ago, and fears of another high-profile Labor defeat will probably deter the party from contesting the by-election.

The Gippsland win has buoyed The Nationals, which lost two seats at the last Federal election and had its numbers in the Lower House reduced to 10.

Mr Chester will be the youngest member of the Federal National ranks at 40, and is a fresh face among a team of several MPs planning to retire at the next election.

The lost fight to save the single desk and mounting pressure to merge with the Liberals had cast a cloud over the future of the party, but Mr Truss says the win was an excellent result for The Nationals.

Mr Truss told supporters at a post-election party that the young vibrant MP represented the future of the party.

Mr Chester puts Saturday's win down to working hard on local issues and good local and regional representation.

He said while ever The Nationals operate that way, they have "a vibrant future".

Mr Chester said while he understands a review is underway into the future of the party, he is happy for The Nationals to keep working with a level of independence from their Coalition party, because country people still wanted good local candidates who understood country issues representing them.

He said the single-age pension emerged as one of the biggest issues during the election, and costs of fuel to families and rural businesses were also important.

Mr Chester said there were also immense opportunities for farmers in his electorate through investments in water infrastructure which he believes would help secure Gippsland as one of the "food bowls of Australia".

He said the Federal Government has an obligation to engage rural communities more in the design of its emissions trading scheme, with huge uncertainty in the country about what it means for agriculture and particularly the large number of dairy farms in his region.