STOCKHOLM (AFP) - A left-leaning coalition led by Sweden's opposition Social Democrats defeated the incumbent centre-right government in Sunday's general election, while the far right was headed for historic gains.
The anti-immigrant Sweden Democrats more than doubled their votes, to about 13 per cent, becoming the Nordic country's third-largest party and the "absolute kingmaker" in the legislature.
Prime Minister Fredrik Reinfeldt, who has presided over a four-party conservative-liberal coalition for the past eight years, conceded defeat late on Sunday with the vote counting almost complete.
"We didn't make it," the 49-year-old leader of the Moderates party told supporters in Stockholm, adding he would hand in his resignation Monday.
This sets the stage for the Social Democrat leader, 57-year-old former trade unionist Stefan Loefven, to attempt to form a minority coalition government with the Greens and the former communist Left Party.
With over 95 per cent of all districts counted, the red-green coalition had garnered a total of 43.6 per cent of the vote.
This compared with 39.5 per cent for the four-party Alliance led by Reinfeldt.
"It looks like a Social Democrat-led government and that of course is a victory," Social Democrat party secretary Carin Jaemtin told AFP earlier Sunday.
Loefven ran on a pledge to narrow a growing income gap, which has worried many in traditionally egalitarian Sweden, while also vowing to improve the schools and invest more on infrastructure.
While he was ahead in the polls throughout the campaign, he had warned against complacency, and on the eve of the election admitted that the Sweden Democrats could end up in a pivotal position in the new parliament.
The far-right Sweden Democrats were a virtual non-entity less than a decade ago, and only entered parliament in the 2010 election, winning 5.7 per cent of the vote and 20 seats in the 349-seat legislature.
Sunday's result, which is likely to more than double their presence in the parliament, is a major triumph for its leader, 35-year-old Jimmie Aakesson.
"We're the absolute kingmaker now," Aakesson said in front of jubilant supporters in the Swedish capital.
He told broadcaster SVT that the other parties, which have refused to negotiate with the Sweden Democrats in parliament since 2010, "can't ignore us the way they have ignored us over the past four years."
"You have to be able to govern this country for four years, and it's going to be hard if they are not prepared to talk to us or listen to us," Aakesson told SVT.
Aakesson has carried out a lengthy campaign to clean up the party's image as a fringe phenomenon, expelling members whose xenophobic remarks have contributed to its racist reputation.
Outgoing Prime Minister Reinfeldt has been widely credited with steering the country through the global financial crisis, consolidating Sweden's position as one of the healthiest economies in Europe.
Despite these accomplishments, the Swedes yearn for fresh faces at the top, according to observers, citing this as a main reason for the centre-right's changing electoral fortunes.
Meanwhile, the Sweden Democrat's huge advances are seen due to growing concern in Sweden over an accelerating influx of refugees, with up to 90,000 expected to travel to the Nordic country this year.
"I like their policy on immigration and for the elderly," said Madeleine Filipiak, a 20-year-old bartender who voted for the Sweden Democrats. She said policies on immigration had gone too far: "We can't afford it."
The electoral gain for the Sweden Democrats confirms a Europe-wide trend of soaring popularity for populist right-wing parties.
The eurosceptic Alternative for Germany, which has flirted with populist positions on immigration and law and order, made gains in elections Sunday in the eastern states of Thuringia and Brandenburg.