CANBERRA: Australia`s agonizing wait for a new government is expected to finally end on Tuesday, with independent lawmakers holding the balance of power in parliament due to decide their allegiances later in the day.

Prime Minister Julia Gillard`s Labor Party is narrowly favored to win the race to form a minority government, with the opposition conservative coalition conceding on Tuesday morning that its prospects of securing power appeared to be dimming.

If Labor regains power after inconclusive August 21 elections, it plans to go ahead with a mining tax, a $38 billion national telecoms project and resume working toward a carbon market.

"We haven`t made a final decision yet," Tony Windsor, one of the three undecided independent lawmakers, told reporters as he entered parliament house for final deliberations.

After the August 21 polls, both Labor and the opposition conservatives finished short of the 76 seats needed to form a majority administration in the 150-seat lower house.

Labor has a block of 74 seats, including an alliance with one Green MP and an independent lawmaker, and the conservatives have 73 seats, leaving the three remaining independents to decide which of the major parties can form an administration.

Windsor suggested a decision could be announced around 2 p.m. (0400 GMT) but he would not be drawn on which way he was leaning, not how the other two independents were inclined.

"My guess would be probably early afternoon. But as soon as we can announce it, we will," Windsor said.

The three remaining independents, who all hail from rural Australia, plan to make their decision after receiving final documents from Labor and the conservative Liberal-National coalition on Tuesday morning.

Even though all three were once members of the coalition`s junior party, the Nationals, two of them have signaled they may not side with their old colleagues, each having fallen out with them over the years on issues focusing on rural communities.

The three are all supportive of Labor`s $38 billion plan to build a national fiber-optic broadband network, which would help communications in rural and remote areas.

Windsor said the most important factor was to put together a stable government that could work for some time.

The Nationals` leader in the upper house Senate, Barnaby Joyce, said it appeared the remaining independents might not back the conservatives. "You get a sense that the momentum`s slipping away from us," Joyce told ABC.

BDST: 0345 HRS, September 07, 2010