Australia has been eclipsed at the world’s biggest song contest with Delta Goodrem’s performance finishing fourth, dashing hopes for the nation’s first Eurovision winner.

The former Neighbours star dazzled at the grand final of the Eurovision Song Contest in Vienna, Austria, early on Sunday morning Australian time.

Performing her power ballad Eclipse, Goodrem had been considered one of Australia’s best chances for the top prize since Dami Im finished second in 2016.

While voters loved her, she couldn’t beat Bulgarian singer Dara, whose party anthem Bangaranga took out the 70th edition of the contest in the first win for the eastern European nation.

Goodrem thanked those who supported her along the Eurovision journey following the release of the results.

“Representing Australia on the Eurovision stage and being part of this incredible community has been unforgettable,” the 41-year-old singer-songwriter said.

“I’m so grateful for all the love and support from home and around the world. It has carried me every step of the way.”

Performing eighth out of 25 acts, Goodrem stood at a sparkling, golden piano, dancing across the keys and belting out the lyrics, “one touch, one kiss, all my life for a night life this”.

As the song rose to a crescendo, she ascended to a platform that rose from the instrument while sparklers and fog machines unleashed behind her.

Eurovision tragics, draped in flags, wigs and everything from fanciful golden gowns to traditional European clothing, braved the early morning chill across Australia to watch Goodrem sing.

Leo Chant spent days making an applique of diamantes to recreate Goodrem’s costume ahead of a broadcast party at Hurstville, in Sydney’s south.

“I’ve been waiting so long - for the 10 years that Australia has been in it - for Delta to participate,” Chant, who also heads the event, told AAP.

“She was phenomenal, she was iconic, she was Delta.”

Hopes were high as results began to flow in.

The Eurovision winner is decided by votes from each country’s jury of industry professionals and viewer votes cast by phone or text.

Neither the jury nor the public can vote for their own country.

The act with the most points wins and the victorious country hosts the competition the following year.

By the time the jury’s votes were allocated, Australia was sitting in equal second place with Denmark, behind Bulgaria.

But the public poll rewrote the leaderboard, pushing Israel to second and Romania into the final podium slot, narrowly ahead of Australia.

The result came as a surprise after bookies’ pick Finland faded to sixth, while Australia had been positioned as the second-favourite.

It was the nation’s second-best performance in Eurovision behind Dami Im’s Sound of Silence, which finished runner-up to Ukraine’s Jamala in Stockholm in 2016.

It was an emotional rollercoaster for the dozens gathered in Sydney’s south at the Eurovision broadcast party.

“I was expecting that she would come top three, but top four is still exceptional,” Chant said.

“She still did Australia proud. But you have to hand it to Bulgaria. They were amazing and they’ve never won it before.”

Prime Minister Anthony Albanese also praised the Aussie star’s performance, saying he watched the coverage as the votes rolled in.

“Delta Goodrem is someone who can be very, very proud of her efforts,” he told reporters on Sunday.

“And all Australians are proud of Delta.”

The often irreverent song competition has been marred by controversy as several countries boycotted it this year over Israel’s participation.

The public broadcasters of five countries - Spain, the Netherlands, Ireland, Iceland and Slovenia - oppose Israel’s involvement over the country’s treatment of Palestinians in the Gaza Strip.