Harry Jenkins has been re-elected unopposed as Speaker of the House of Representatives.
Labor's nomination of Mr Jenkins means it will be forced to govern with a majority of just one vote on the floor of parliament - 75 to 74 votes.
The coalition last week walked away from a reform deal that would have seen the Speaker paired and the government maintain a two-vote buffer.
Asked if he accepted the nomination, Mr Jenkins said: "Definitely yes."
Prime Minister Julia Gillard told parliament the election of Mr Jenkins seemed to have been a long time coming.
"I welcome your appointment not only as a valued colleague and old friend, but as a person learned in the ways of this parliament, eminently suited by temperament and ability to be the presiding officer of this house," she said.
The prime minister said that, given the "unusually high level of attention" recently given to parliamentary reform, she honoured Mr Jenkins' commitment to that cause.
"I can think of no one more worthy of holding this office in such a crucial time for our democracy," Ms Gillard said, adding that Opposition leader Tony Abbott had stated Mr Jenkins was an "ideal candidate".
Ms Gillard renewed her invitation to the opposition to help make her minority government work in Australia's first hung parliament in 70 years.
"To embrace the possibility of reform," she said.
She described an agreement, between Labor, the coalition and independents, to reform parliamentary processes as "an agreement of honour".
"That some of the reforms outlined in the agreement have not been adhered to is a cause for regret," Ms Gillard said, referring to the coalition's decision to back away from pairing the Speaker.
"But I do not regard the agreement or the spirit that engendered it as a lost cause."
Mr Abbott also congratulated Mr Jenkins on his re-election.
"I never waivered in my faith that you were the best person for the job that you hold," the opposition leader said.
"There were weeks when others doubted ... but I was with you every step of the way."
Ms Gillard had refused to back Mr Jenkins while the major parties bickered over whether or not the Speaker would be paired.
For a while she was backing the abilities of Independent MP Rob Oakeshott, who'd put his hand up for the Speaker's job.
Mr Abbott said Mr Jenkins was capable of introducing a true Westminster-style speakership to Australian politics.
Mr Abbott said the parliament would be one of robust debate and not "false consensus".
Under the new standing orders of the 43rd parliament the speaker would be able to ensure ministerial answer were brief and "directly relevant to the question", the Liberal leader said.
"You are the custodian of the traditions of this parliament," Mr Abbott said, adding he also was the custodian of the rights of members.
"You are no longer a creature of party ... or the executive.
"You are now free to be in this parliament everything that a Westminster-style Speaker should be.
"This is your time."
While the pairing agreement for the Speaker has been scrapped, there are 21 other parliamentary reforms outlined in the deal struck earlier this month between Labor, the coalition and the independents.
Independent MP Rob Oakeshott, architect of the reform agreement with Labor and the coalition, said the recent "skullduggery" over how the minority government would run parliament should now be left behind.
"You will have the full support of the crossbenches in your challenging role over the next three years, we hope," he said.
He talked of the "sunshine" offered by the possibility of parliamentary reform.
"I hope the sunshine is coming in and I hope we can all make hay while the sun shines."
- AAP
Harry Jenkins elected Australian Speaker
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