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Independent candidate Kerryn Phelps photographed after election victory in Sydney
The Australian government coalition lost its parliamentary majority of one seat after a by-election in Sydney.
Kerryn Phelps, a local doctor and popular independent candidate, easily won the seat in Wentworth.
The ruling Liberal Party, Prime Minister Scott Morrison, was fighting to keep his riding, which had been vacated by his predecessor, Malcolm Turnbull.
Australia has had six prime ministers in eight years and faces new uncertainties.
How did the ruling party react?
The center-right Liberals will have to rely on independent MPs to survive the confidence votes. Two have already promised not to support Mr. Morrison.
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Speaking at the seat of Liberal candidate Dave Sharma, Mr. Morrison said the day had been "tough" and that the result was "not unexpected."
"The Liberals are angry and they have expressed it," he said.
"We will work constructively with all members of the commission, as we have always done … The Liberal-National government will be back to work on Monday."
A helping hand to stab the back
Analysis of Phil Mercer, BBC News, Sydney
Revenge. The people of Wentworth have sent the Australian political class a direct message: they would not be tolerated and the dysfunction of a political party would not be tolerated.
The defeat of Dave Sharma, the Liberal candidate in power in the Sydney by-election, is an act of revenge on the part of voters angry and frustrated by the merciless departure of the Prime Minister from their former MP, Malcolm Turnbull. Scott Morrison has failed his first electoral test as prime minister and more and more problems are being prepared.
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Liberal Party candidate Dave Sharma could not resist Kerryn Phelps' independence
The thunderbolt and thunder that rocked Bondi Beach and other parts of Wentworth at the closing of the polls are a sign of a raging political race that announces itself. The Morrison government has lost its weak parliamentary majority, but it should survive, at least for now, with the support of independent MPs.
However, with an election scheduled for next May, its long-term prospects look increasingly bleak.
Why was Jerusalem an electoral problem?
The Prime Minister's proposal that Australia could follow the United States and move its embassy to Jerusalem fueled controversy in the by-election.
Sharma is the former ambassador of Australia to Israel and proposed for the first time such an approach.
About 13 percent of Wentworth voters are Jewish, compared with less than 0.5 percent of the Australian population.
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The United States moved their embassy to Jerusalem in May
Kerryn Phelps said any decision on recognizing Jerusalem as the capital of Israel should take into account commercial, security and defense considerations.
