The Conservatives won most seats in a landmark general election but Britain was left on Friday with a hung parliament as the party failed to land a knock out blow against Labour prime minister Gordon Brown.
Plunged into the kind of political uncertainty the country has not experienced since 1974, Conservative leader David Cameron insisted his centre-left rival had lost his mandate to govern.
But the prime minister's key allies indicated Labour, which has ruled since 1997, would try to cling to power by seeking a deal with the centrist Liberal Democrats.
With 35 of the 650 seats still to be counted, the Conservatives had 290 lawmakers compared to 247 for Labour, meaning it was impossible for the Tories to win the 326 seats they need to govern alone in the House of Commons.
The Liberal Democrats had just 51 -- a disaster for the third party after what had seemed a strong campaign.
Brown's de facto deputy Peter Mandelson said Labour would "obviously" be prepared to consider an alliance with the Liberal Democrats that would allow it to remain in power for a fourth term.
"Obviously we would be prepared to consider that," Mandelson told Sky News.
He also hinted at offering to meet a key Liberal Democrat demand to change the country's first-past-the-post voting system, saying it was "on its last legs".
But Mandelson poured scorn on suggestions that Brown should stand down. "I think that would be rather a surprising thing to happen... I don't think it would help matters if he were suddenly to stand aside," he said.
Another senior cabinet minister, Welsh Secretary Peter Hain, said he believed Brown would try to form a "progressive majority" with the Liberal Democrats, stressing it was his constitutional right to try to do so.
But senior Conservative figure Michael Gove told BBC radio a pact between Labour and the Liberal Democrats would be "a coalition of the defeated".
Brown also appeared to indicate he wanted to stay in power, raising the possibility of several uncertain days of horse-trading.
"The outcome of this country's vote is not yet known but my duty to the country coming out of this election is to play my part in Britain having a strong, stable and principled government," he said, before returning to the prime minister's Downing Street residence.
It was a crushing night for the Lib Dems after a surge of support Clegg attracted during the campaign failed to translate into winning seats.
The party actually looked set to finish with fewer lawmakers than at the last election.
Clegg admitted: "This has obviously been a disappointing night for the Liberal Democrats. We simply haven't achieved what we had hoped."
He gave no indication of which party he would support.
Cameron tried to grab the momentum for the Conservatives by insisting Britain was crying out for "new leadership".
"We have to wait for the full results to come out, but I believe it is already clear that the Labour government has lost its mandate to govern our country," he said after winning his seat.
"What is clear from these results is that the country, our country, wants change. That change is going to require new leadership."
Some commentators said the only solution to the deadlock might be fresh elections.
"The more we hear of the different permutations of who might work with whom after tonight, the more I feel there is only one certainty: we'll be having another general election before too long," The Guardian newspaper said.
The uncertainty had an immediate effect on the pound, which plunged to its lowest level against the dollar in more than a year on Friday.
One notable political casualty was Northern Ireland First Minister Peter Robinson, who lost his House of Commons seat after a sex and cash scandal involving him and his wife.
But he will stay on as Northern Ireland's leader due to his seat in the British-ruled province's assembly.
High-profile Labour losses included former interior minister Jacqui Smith, who was caught up in an expenses scandal after claiming for porn films for her husband. She lost her seat in Redditch, central England, to the Conservatives.
The polls were marred by a number of protests by voters prevented from casting their ballots in cities including London, Leeds and Sheffield because they were still queuing at 10:00pm (2100 GMT) when polling stations closed.
Justice Secretary Jack Straw said legal challenges could not be ruled out, while the Electoral Commission watchdog said it would carry out a "thorough review".