The mood was upbeat at the Draft House, a bar in the heart of the City of London, the financial and historical centre of the capital and traditionally a stronghold of Conservative support as well as a key source of donors for the party during the campaign.

"I voted for the Conservatives because Labour is not competent on financial matters," said Mr Ben Woodthorpe, 39, as he sipped a beer. "It's very exciting because it's too close to call."

Several fellow City workers shouted "Hooray!" as a television screen flashed up the exit poll showing Mr Cameron set to take more seats than predicted - albeit just short of an outright majority.

There were smiles all round as several drinkers gave victory signs.

"Why would you change? The economy is doing well after five years with the Conservatives," said City worker Grant.

Polls up to the eve of the election had indicated the vote would be one of Britain's closest in decades, but the exit poll confounded expectations by showing the Labour party of Mr Ed Miliband losing seats.

Meanwhile at a party for the Young Conservatives group, around 100 activists gathered in a sports bar in central London watching the results come in.

"Absolute delight," was how Ms Alexandra Paterson, National Chairman of Conservative Future, summed up her feelings.

"British people voted for competence," she added. "I am absolutely thrilled, it's wonderful news, it's really what this country needs."

Fellow Conservative activist Christopher Jackson, 25, said the results followed "a lot of hard work", particularly in closely fought London seats.

"I think the general mood is one of real encouragement," Mr Jackson said. "When people saw those exit polls, I think it really lightened up the mood, you could see people, visibly were a lot more excited."

What might have swung it? Mr Meredith Lloyd, 27, said he believed it was due to concerns of voters in England and Wales at the prospect of a government involving the Scottish National Party (SNP).

The pro-independence SNP had talked up its prospects of propping up a minority Labour government during the election campaign. The SNP is now forecast to win all bar one of the 59 seats north of the border.

"There is a wish for a strong government," he added. "People put stability as one of their first priorities."

The exit polls surprised analysts who had predicted a closer vote, and said the difference could be due to "shy" Conservative support.

Experts said the Conservatives could now try to form a second coalition with the Liberal Democrats.

The Conservatives may also try to go it alone with a minority government dependent on backing from Northern Ireland's Democratic Unionist Party (DUP).

"Even if it moves back from these figures, it will still be a significantly better result for the Conservatives than anyone was predicting," said Professor Tony Travers from the London School of Economics (LSE).

The exit poll showed the Conservatives winning 316 constituencies in the 650-seat British Parliament, compared with 239 for Ed Miliband's centre-left Labour party.

The Liberal Democrats were projected to win just 10 seats - down from 56 at the moment - and the SNP to take 58 of Scotland's 59 seats, up from their current tally of just six in what was once a Labour heartland.

Asked why Mr Cameron may have fared better than expected, Prof Travers said it could be the phenomenon of "shy" Conservatives who do not admit in opinion polls to supporting a party whose austerity measures have polarised views in Britain.

"Shy" Conservatives were credited with helping Mr John Major win the 1992 General Election even though opinion polls had indicated Labour were ahead.

"It will either have been a late surge or long-term 'shy answering' and it takes some time to work that out," Mr Travers said.

Professor Patrick Dunleavy, a London School of Economics professor, said the exit polls indicated that Mr Cameron "looks like he's there for five years" - the full length of a parliamentary term in Britain.

"The paradox is David Cameron survives as prime minister but prime minister of a minority government which doesn't have the votes to do anything radical," he said.

Prof Dunleavy said the big story could be the collapse of the Liberal Democrats, with most of their seats going to the Conservatives and strengthening Mr Cameron.

"It looks as if there has been a late surge to the Conservatives, who have eviscerated the Liberal Democrats who are almost going to cease to exist," Prof Dunleavy said.

"We don't have the vote share figures but it certainly looks as if possibly some voters shied away from the thought of change at the last minute."

Professor John Curtice, a professor at Strathclyde University who helped organise the exit poll, singled out the figures for Scotland as particularly significant.

"North of the border we're discovering the SNP has indeed done as well as the polls said they were going to," he said.

Experts said that Mr Cameron could stay on as prime minister with DUP support and not team up with the Liberal Democrats, who have been at loggerheads with the Conservatives in the election despite working together in coalition for the previous five years.

Whatever the arrangement, a Conservative-led government would mean Britain will press ahead with holding the EU membership referendum promised by Mr Cameron by 2017.

Mr Iain Begg, a European Union expert at the LSE, warned there was now "a risk that Britain will come out of the EU sooner than makes sense".