He is now being transported to Government House to be sworn in by Governor General, Sir Michael Ogio.
O'Neill was nominated by Opposition Leader, Belden Namah, when Parliament resumed at 2pm today, and seconded by sacked Petroleum Minister, William Duma.
Bulolo MP Sam Basil closed nominations.
Forests Minister Timothy Bonga walked out in protest.
Several Government Ministers and MPs moved over to Opposition ranks today.
Ministers included O'Neill, Internal Security Minister Mark Maipakai and Minister Assisting Prime Minister Charles Abel.