"Ted has put his heart and soul into the Victorian Liberal Party ... for the best part of three decades," Dr Napthine said.
"He is an outstanding individual.
"He is not just a colleague, he is a great friend."
Dr Napthine said he was proud to serve under the Baillieu government."I look forward to providing strong, stable and positive government for the people of Victoria," he said.
Mr Shaw's resignation from the Liberals leaves the coalition with only half the seats on the floor of the lower house, and relying on the vote of Mr Shaw - an ex-bouncer accused of misconduct in public office - to remain in power.In a statement, Mr Shaw said he had lost confidence in the coalition government leadership.
"Labor left Victoria in a mess and Victorians elected a coalition government to fix the problems and build for the future," he said.
"While the government has made significant progress in that direction, I believe my actions reflect the general loss of confidence Victorians are feeling in the leadership of the government."Mr Shaw did not say whether he would support the government on matters of supply.
Federal Opposition Leader Tony Abbott has congratulated Denis Napthine for being elected Victorian premier and praised outgoing leader Ted Baillieu as a man of integrity and honour.
Mr Baillieu resigned as Victorian premier on Wednesday night.Mr Abbott thanked Mr Baillieu for his service to the people of Victoria.
"Ted is a man of integrity and honour and I wish him well for the future," he said in a brief statement.
As premier, Mr Baillieu had put Victoria''s finances on a sustainable footing and made significant investments in infrastructure, Mr Abbott said.Mr Abbott also congratulated Mr Napthine on his election as leader.
"I look forward to working closely with him," he said.
From early in his life, it was clear Ted Baillieu would reach great heights.
But the 200cm-tall Victorian premier hardly stayed long enough to enjoy the view.
Edward Norman "Ted" Baillieu was born on July 31, 1953, the youngest of seven children and a member of Melbourne's aristocratic Baillieu-Myer clan.Educated at Melbourne Grammar, Mr Baillieu studied architecture at Melbourne University and business studies (real estate) at RMIT.
There followed a successful career in the property sector - he was a partner with Mayne & Baillieu Architects and director of real estate company Knight Frank Holdings.Mr Baillieu was elected to parliament in the blue ribbon Liberal seat of Hawthorn in 1999 - the very same election at which his political mentor Jeff Kennett suffered a shock defeat to Labor's Steve Bracks.
He served under Denis Napthine and Robert Doyle during the party's difficult years in the early part of the noughties, before becoming leader in 2006.
His Labor opponents tried to dismiss him as "Ted the toff from Toorak", but Mr Baillieu performed relatively well, clawing back eight seats for the coalition at the 2006 poll.Baillieu led the coalition to a shock one-seat election victory in November 2010 and became Victoria's 46th premier.But the slender majority made political life tough, and it didn't take long for his government to lose its shine.Budget cuts and long-running pay disputes with teachers and others took a political toll, and Mr Baillieu was criticised from his own side for his inability to sell the government's message.There were also concerns about his chief of staff's dealings with a disgraced political staffer, which were this week referred to the state's anti-corruption body.When the pressure on his leadership became too great, Mr Baillieu made his way to the exit."I love this state, I love the Liberal Party and I love this role that I have had the honour to enjoy," Baillieu said, with his head held high.