Newly re-elected Whitlam Labor MP Stephen Jones has vowed to fight from the opposition bench for the funding of key projects in the region after the Coalition's shock return to government on Saturday.
Labor was tipped to win and exit polls on Saturday indicated the same result but the Liberals have secured 74 seats to Labor's 65, with six still to call as of Sunday afternoon.
The Coalition needs 76 seats to form a majority government.
Read more: How election day unfolded in the Illawarra
Mr Jones decisively won in his seat but was saddened the party's messages had not cut through the Liberal's "dirty and dishonest campaign".
"First and foremost congratulations to Scott Morrison and his team on winning," he said.
"Clearly the Liberals were able to strike up enough concern in key places. The Liberal campaign focused 100 per cent of its attention on Labor's agenda and did not put forward its own agenda.
"But the ALP can't cry about it. Politics is a tough game.
"Now it is our job to hold the government to account and to make sure we do not make the same mistakes in three years."
ALP had promised big spending on education and health care including for cancer patients and dental services for pensioners but the attacks on Labor's franking credits policy and supposed "death tax" appears to have hurt the party.
Mr Jones said he was "sad" to not see his party win but said on a local and national level that the ALP had "put together the best plan for reforms".
"We had a plan for hospitals, education and roads and we will push for the government for changes in the next three years. If we can't force them to make reforms then we will take our policies to the next election."
Mr Jones said it would obviously be "harder but not impossible" to secure funding for projects in the Illawarra now the Coalition had been returned to government.
Mr Jones won 61 per cent of the vote over Nationals candidate Stephen Wentworth with 83 per cent of votes counted.
He congratulated his Labor colleagues, re-elected Cunningham MP Sharon Bird and newly-elected Gilmore MP Fiona Phillips.
"Fiona Phillips ran a sensational campaign for the past three years and I am proud of what she has achieved," he said. "Ms Phillips has bucked the trend and now Labor holds the seat for the first time in many years.
"She ran a campaign that forced Liberals to no longer take the seat for granted.
"Fiona is energetic, dynamic and will make a real difference."
Mr Jones said he looked forward to forming a united Labor team with his colleagues representing the Illawarra and South Coast.
The MP thanked his supporters and volunteers during the election campaign and cooked many of them lunch on Sunday.
"I am grateful the electorate has put its is faith in me once again," Mr Jones said. "I will work tirelessly and will be getting straight back into work."