The upset has cost Prime Minister Scott Morrison his single-seat majority in Parliament. However, new premier Scott Morrison (picture) saw a glimmer of hope yesterday after Phelps' lead narrowed to 884 votes, according to the official tally, with postal ballots still being counted.
The party has stressed that they would be keen to run Mr Sharma again but it is not clear whether the former ambassador and father-of-three would be prepared to contest it again.
Her victory undoubtedly had much to do with Wentworth voters' frustration over how the Liberals had treated Turnbull, whose ouster was the latest turn in what has become a revolving door at the top of Australian politics in recent years.
If the win for Dr Phelps is confirmed, the coalition government will be forced to rule as a minority in the Australian Parliament.
Mr Turnbull had held the seat with a margin of 18%.
The contest had gathered worldwide attention after Mr Morrison's late attempt to garner support from Jewish voters, who account for 13 per cent of Wentworth's electorate, by suggesting Australia could recognise Jerusalem as Israel's capital and move its embassy there from Tel Aviv.
George Megalogenis, an author and political commentator, said that kind of disconnect could help explain Morrison's scattershot attempts to woo Wentworth's wavering Liberal voters in the weeks before the election. "I'm behind Kerryn and it will be hard to make that up".
"We have been at 75 (seats), not 76, since the former prime minister resigned", Mr Morrison told reporters.
Mr Morrison conceded the loss was not unexpected.
"They certainly have some strong views and they've shown them tonight", the ABC report she said.
As counting continued, Dr Phelps was on 52 per cent of the two-party preferred vote thanks to preferences from Labor and minor parties. Successive Labor Party and Liberal-National Coalition governments have imposed sweeping cuts to healthcare, education and welfare, attacked fundamental democratic rights and stepped up Australian involvement in US-led wars and military preparations for conflict with China.
"We can talk about whatever is in the middle in terms of negotiating better outcomes for Australians because I think the role of the cross bench is to hold government to account".
"What I will continue to do is be working closely with the crossbenchers, as I have been doing", he said, noting the government had not had a majority during the byelection period, and hadn't lost one vote in that time.
Independent Andrew Wilkie said he would not guarantee support, while Cathy McGowan, the Greens' Adam Bandt and Centre Alliance's Rebekha Sharkie are yet to comment following Dr Phelps' victory. In fact, they were created to demonstrate that the Morrison government is unequivocally committed to every US-led war and military provocation, including its backing for Israel's persecution of the Palestinians and its moves towards a regime-change against Iran.
"None of them have really got their mind on the job".
Peta Credlin discussing the Wentworth result on Sky News.