US president-elect Barack Obama has realised Martin Luther King's dream of 45 years ago, Prime Minister Kevin Rudd says.
"Forty-five years ago Martin Luther King had a dream of an America where men and women would be judged not on the colour of their skin but on the content of their character.
"Today, what America has done is turn that dream into a reality," Mr Rudd told reports in Launceston.
Mr Rudd said the US election result was a great testament to the strength and maturity of the American democratic process.
Senator Obama carries a message of hope not only for America but for the rest of the world, he said.
"A world which is in many respects fearful for its future," Mr Rudd said.
"The world looks to America for global leadership on the great global challenges of the 21st century."
Mr Rudd listed these challenges as the global financial crisis, climate change, and the challenges and opportunities in the Asia-Pacific region this century.
He said he intended to make a telephone call congratulating Senator Obama "as soon as possible".
Mr Rudd said the Australia-US alliance had prospered in the past and will prosper into the future.
"Australia looks forward to working in the closest possible way in the closest possible partnership with an Obama administration, acting together to deal with the great common global challenges we face as democracies," he said.
Mr Rudd congratulated Senator John McCain as a strong friend of Australia and an advocate in the fight against climate change.
He also congratulated US ambassador to Australia Robert McCallum who announced his retirement on Wednesday.
"The world has relied on strong American leadership for much of the century that has passed," Mr Rudd said.
"Given the great challenges we face for the future the world even more relies on strong American leadership into the future.
"Australia looks forward to working closely, in close partnership, in close friendship, with an America under this new Obama administration."
Mr Rudd described Senator Obama's acceptance speech as "extraordinary".
He said he had spoken twice previously with Senator Obama and the president-elect was a good man who had the interests of the world at heart.
"He has delivered to the world and to his country a very good message of hope," Mr Rudd said.
"And this is a message of hope over fear."
Mr Rudd said this was a great day for American democracy.
"Let us celebrate this day with our friends in America," he said.
Asked about the former government's claim that terrorists would celebrate if Obama became president, Mr Rudd said the Liberal party must now explain and account for that statement.
Mr Rudd said that as an ally of the United States, Australia will continue to work closely with America on Iraq and Afghanistan .
Meanwhile, federal Opposition Leader Malcolm Turnbull has warmly congratulated Obama.
Senator Obama won the US presidential election, making him the first black commander-in-chief of the world's only remaining superpower.
"On behalf of the federal opposition in Australia, I congratulate Senator Barack Obama on his historic election victory and look forward to working closely and productively with the new administration," Mr Turnbull said in a statement.
While Mr Turnbull comes from the other side of politics, he declared the Democrat senator's victory a defining moment in history.
"The idea that an African-American could be president would have been unthinkable only a few decades ago," he said.
"As president, Barack Obama will have the opportunity to show the world the strength, resilience and above all the diversity of American democracy," Mr Turnbull said.
"We remember Martin Luther King's 'I have a dream' speech, when he dreamt of a time when his children would be judged not by the colour of their skin, but by the contents of character," he told reporters in Sydney.
"I wonder if Dr King ever dreamt that there would be an African-American president of the United States."
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