Mr Carpenter had put forward a proposal to the National Party, who held the balance of the power after the vote count became clear yesterday.

The Liberals held 26 seats, and with the support of Independents Janet Woollard and Liz Constable, the Nationals and former Labor minister turned Independent John Bowler, that number has been boosted to 31.

Nationals leader Brendon Grylls today revealed the party's state council had endorsed the recommendation by the Nationals state executive to form a minority government with the Liberal Party, led by Colin Barnett, who will now become WA's 29th Premier.

Mr Grylls said the prospect of having to share the balance of power with the Greens in the Upper House had weighed heavily on the minds of the Nationals.

Mr Carpenter said Labor could have done better and he accepted full responsibility for the outcome of the election.

"I accept full responsibility for the outcome of this election for the labor party - it is therefore my intention to resign as leader of the state parliamentary Labor party," Mr Carpenter said.

The former Premier said he intended to remain in parliament as the member for Willagee.

He said it would be a testing time for the party but it was strong party.

Mr Carpenter said Mr Barnett would inherit the legacy of a strong ecomony a good set of finances and low unemployment level from the Labor government.

"We can be proud of this record, nevertheless the election result shows that our government did not meet the full expectations of the community," Mr Carpetner said.

"We could have done better."

Mr Carpenter said said he fully understood and respected the Nationals decision.

He congratulated Mr Barnett and the Liberals on a truly remarkable result.