Canadians have elected their first Conservative government in 12 years.
But the electorate gave the party a far-from-decisive mandate to push through its agenda of tax cuts, extra military spending and improved ties with Washington.
The Conservatives, led by economist Stephen Harper, will have some 125 seats in the Canadian Parliament, 30 below the 155 that form a majority but still 22 seats ahead of the ruling Liberals.
Prime Minister Paul Martin, his hopes of a decade in power dashed by yesterday's results, conceded defeat and said he would not lead the Liberals into the next election.
"I have just called Stephen Harper and I have offered him my congratulations," Martin told supporters. "The people of Canada have chosen him to lead a minority government."
Opinion polls had pointed to a Conservative minority government, but the number of Conservative seats was somewhat below the forecasts, pointing to an unstable government that is unlikely to last for long.
Traditional wisdom dictates that minority governments in Canada usually last between a year and 18 months.
The Conservatives have no natural allies in a four-party Canadian Parliament and will need to seek support from political rivals on an issue-by-issue basis.
The left-leaning New Democrats look on course to win 30 seats - their best showing since 1988.