Greece's Socialists under the leadership of George Papandreou won elections Sunday after voters expressed their discontent over the conservative government's handling of the economic crisis and corruption.
With nearly 30 percent of ballots counted, the Socialist PASOK party was leading with 44 percent of the vote and an absolute majority in parliament. The Conservative New Democracy Party came in second with 36 percent.
According to the interior ministry, based on the partial results PASOK would occupy 158 out of 300 seats in parliament, with New Democracy trailing with 97 seats.
Tens of thousands of PASOK supporters celebrated in major cities across the country, waving green flags and honking car horns.
"It is a historic victory for PASOK and for George Papandreou," said PASOK party member Evangelos Papandreou.
The election pitted Papandreou against Costas Karamanlis, in a battle between the heirs of two of the most powerful political dynasties that have dominated politics in the southern Mediterranean country since the 1950s.
The elections were seen as critical for implementing reforms needed in the Eurozone's second poorest member, which is on the brink of a recession.
Panagiotis Patrakis, an economist professor at the University of Athens, said improving the state of public finances is the primary challenge of the next government, as is taking all necessary measures to inflate economic activity.
The Socialists will face high unemployment, a budget deficit exceeding six percent of GDP, illegal immigration and an insufficient social security system.
PASOK has proposed a different policy to tackle the economic crisis by promising a three billion euros ($4.3 billion) stimulus package, and proposing heavier taxing of the rich and helping the poor.
Outgoing Prime Minister Karamanlis had called for two years of tough reforms such as public sector wage freezes.
Poor state revenues forced the government to resort to borrowing 52 billion euros ($75.8 billion) so far this year in order to finance a widening budget deficit, expected to exceed eight percent of gross domestic product.
Karamanlis had fallen out of favour with many voters in the wake of a series of financial scandals that have embroiled his government, with allegations of corruption leading to the worst riots Greece has seen in decades.