Tony Abbott says he saw his loss in Warringah coming.
The former prime minister, who on Saturday night lost his Sydney seat of 24 years, says the writing was on the wall after the Liberals suffered defeat in the Wentworth by-election last year.
But Mr Abbott says he decided it would be better to lose than to give up.
"I can't say that it doesn't hurt to lose but I decided back then, in October of last year, that if I had to lose, so be it. I'd rather be a loser than a quitter," Mr Abbott told a rather upbeat crowd at Manly Leagues Club.
Australia's 28th prime minister was beaten convincingly by Olympian Zali Steggall, an independent who rode a wave of discontent with the coalition's handling of climate issues.
Ms Steggall, who arrived to a rock star reception at a Manly hotel, described the result as a "a win for the moderates with a heart".
"Tonight Warringah has definitely voted for the future. Warringah - we have a new beginning for our environment."
Mr Abbott said while it was disappointing to lose his seat, "what matters is what's best for the country.
"What's best for the country is not so much who wins or loses Warringah but who forms, or does not form, a government in Canberra."
The ex-Liberal leader said there was "every chance" the Liberal and National coalition would win the election.
He said it was a "stupendous result" for Prime Minister Scott Morrison who would now enter the Liberal Party pantheon.
Despite losing his seat in a campaign dominated by climate action, Mr Abbott said the wider election result proved "where climate change is a moral issue, we Liberals do it tough. But where climate change is an economic issue, as a result, tonight shows we do very, very well."
With more than 78 per cent of the vote counted at 11.30pm on Saturday, Ms Steggall had 57.8 per cent of the vote in Warringah on a two-party preferred basis while Mr Abbott had 42.2 per cent.
Ms Steggall in victory vowed to be a "climate leader" who would hold the government to account.
Mr Abbott congratulated Ms Steggall but the crowd booed at the mention of her name.
Mr Abbott's mentor, former PM John Howard, said he "grieved" for his loss and saluted the "enormous contribution that Tony has made to public life in Australia".
One Abbott supporter was overheard saying: "We lost the battle but won the war."
Media were not allowed into the event before Mr Abbott arrived and were promptly escorted from the room after he finished speaking.
One worker threatened to call the police to have reporters evicted from the venue.
Mr Abbott hinted he wasn't done with politics stating: "My public life will, I imagine, go on."
