Political leaders are downplaying the significance of a historic by-election, with a state government claiming a breakthrough victory to replace a disgraced MP.

Voters in the coastal NSW electorate of Kiama backed Labor candidate Katelin McInerney to replace former independent MP Gareth Ward, who was forced to resign after being convicted of sexual and indecent assault.

The Liberals' underwhelming result could jolt NSW Opposition Leader Mark Speakman's grip on the party, while Premier Chris Minns notched up an electoral win.

It's the first time in three decades a seat in a by-election has gone to the government.

Mr Speakman vowed to lead the coalition to the 2027 state election and said the Liberal Party's federal turmoil hindered his campaign.

Federal Opposition Leader Sussan Ley dum

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