Julia Gillard will stay as Australia's prime minister after winning the backing of two key independent MPs.

Tony Windsor and Rob Oakeshott held the balance of power in parliament after a fellow independent MP, Bob Katter, backed opposition leader Tony Abbott.

The dramatic announcement ended more than two weeks of political deadlock following indecisive elections.

It gives Ms Gillard the backing of one more MP in the 150-seat lower house than support the Liberal-led coalition.

The BBC's Nick Bryant in Sydney says that with such narrow margins involved, it is going to be quite difficult for her to govern as she wanted to do.

Ms Gillard ousted former Prime Minister Kevin Rudd as Labor leader in an internal party coup in June. She had been his deputy.