Australia's only Liberal government has suffered a day-one loss in parliament after crossbench and opposition MPs sided to back an alternative Speaker.
Tasmania's Liberals were returned to power in minority at the March 23 election after winning just 14 of 35 lower-house seats - four short of a majority.
The Liberals planned to nominate incumbent Speaker Mark Shelton for the position when parliament resumed on Tuesday.
But Labor's pick, 18-year state political veteran Michelle O'Byrne, received the support required to nab the position.
The Liberals decided to not contest the vote on the floor of parliament with the numbers not on their side.
"We have listened to the will of the members," Premier Jeremy Rockliff said.
"I take this opportunity to acknowledge the leadership and wise counsel Mark Shelton has provided to the house ... and I wish the new Speaker all the very best."
Ms O'Byrne had the 18 votes required with the backing of Labor, which holds 10 seats, as well as five Greens, three Jacqui Lambie Network (JLN) members and her brother, independent David O'Byrne.
She entered parliament in 2006 and previously served as the federal member for Bass for six years.
First-term JLN MPs Miriam Beswick, Andrew Jenner and Rebekah Pentland believe Ms O'Byrne will deliver rigour and discipline to the lower house.
"A Speaker must preside over proceedings with impartiality and provide guidance in matters of procedure," the trio said in a statement.
The JLN have signed a deal with the Liberals to provide confidence and supply, but were free to vote on the speakership as they saw fit.
Independents Kristie Johnston and Mr O'Byrne have given their votes of supply and confidence on merit and insist they will maintain their independence.
There were 13 fresh faces in a lower house restored from 25 to 35 seats, including former senator Eric Abetz for the Liberals.
The Liberals suffered a 12 per cent swing against them at the election but Labor only picked up 0.8 per cent of the vote.
New Labor leader Dean Winter said Ms O'Byrne would be "fearless" as Speaker.
"(Her) knowledge of parliamentary processes is unrivalled among Tasmanian MPs," he said.
"Michelle was the best person for the job. That's why we nominated her.
"Throughout her career she has demonstrated a commitment to upholding the highest standards of accountability and transparency."
