By ROSS PEAKE, Political Correspondent

The Democrats have been plunged into painful soul-searching after a disastrous performance in the South Australian election.

Federal leader Natasha Stott Despoja ordered yesterday an immediate review of the party's goals and directions.

She conceded the Democrats had lost the mantle as the protest party and must now decide if they were a major or minor player in Australian politics.

"As a party we need to acknowledge the dilemma of our position," she said.

Senator Stott Despoja portrayed the Democrats as Australia's third political force, an indication she sees the party as a major political player.

However, she was not available after the formal statement on the review to say whether it could result in the Democrats pulling back from some future state and territory elections.

In last year's federal election the Democrats lost a Senate position while the Greens enjoyed a surge of support.

The sober assessment came as votes were still being counted in the cliff-hanger state election.

The Democrats' primary vote in the South Australian poll fell from 16 to just 7.3 per cent, in Senator Stott Despoja's home state.

If the Labor Party wins, it would be in power in every state and territory.

However, Prime Minister John Howard launched a stinging attack on Senator Stott Despoja.

He referred pointedly to the dumping of former leader, Meg Lees, also from South Australia, characterising the change of leader as putting appearance above substance.

"The Democrats are suffering very badly from having been seen to have sided with the Labor Party in the last federal election," Mr Howard told Channel Nine.

Disillusionment with Senator Stott Despoja's leadership was one of the reasons for the party's dramatic slump, he said.

"They did have a leader of substance in Meg Lees, I thought she was a person of substance," he said.

"I found her an honourable person to deal with. I'm not suggesting Natasha's dishonourable, I'm not saying that.

"But I think if people perhaps stepped back and thought, we had a person of real substance there, and perhaps they went for appearance rather than substance, and they've suffered."

Mr Howard acknowledged the line-ball result was a bad outcome for the state Liberal Party considering its support six months ago. The plight of asylum-seekers had not been an important issue, he said.

Opposition Leader Simon Crean also played down the influence of that issue on voters, while saying it crowded out other messages from the political parties.

"I don't think you can say federal issues played any role . . . but the key issues that lifted that [ALP] primary vote were the concentration on education, health and aged care," he said.

Senator Stott Despoja exempted social-justice issues, environmental sustainability and accountability from her sweeping review.

The Democrats faced a major dilemma, being caught in public perceptions between a major party or a minor player.

The review would include the views of Democrat Senators, the party executive and grassroot members, she said.

"It does mean an examination of our position on the political landscape," she said. "After a period of change, including a record surge in our membership, it is time to consolidate and present a united and clear position to the Australian people, particularly in an age of polarised politics.

"It is time to revisit our identity, our positioning and our goals."

Democrats South Australian parliamentary leader Mike Elliott accused Mr Howard of trying to cause friction.

"I reject what is largely other parties' mischief in trying to stir up trouble in the Democrats, which isn't going to happen," he said.

AAP reported last night that the outcome of South Australia's cliff-hanger election hinged on a handful of votes in two doubtful seats and a result may not be known for days.

Postal votes and preferences from two affluent eastern Adelaide electorates will decide whether the Liberal Party wins a third term in power.

Should Labor retain Norwood and capture Hartley from the Liberals, it will form a majority government with 24 seats. But should it fail to claim both seats, Premier Rob Kerin will try to woo four Independents in a bid to form a Liberal minority government and avoid a hung parliament.