New Zealand's opposition National Party has swept to power, ending PM Helen Clark's nine-year Labour government.
Ms Clark admitted defeat and said she would step down as leader.
National leader John Key said the people had voted for a safer, more prosperous and ambitious New Zealand, but warned of tough times ahead.
Correspondents say Ms Clark has presided over years of strong growth and social reforms, but the economy has gone into recession this year.
The centre-right opposition won 45% of the vote, against 34% for Labour, leaving it just short of an overall majority.
It will be able to govern with the help of two smaller parties - the United Future and ACT parties - and will also look for support to the Maori Party.
Mr Key told the BBC he hoped his government would be inclusive.
"I want to run a centre-right government, a pragmatic and decisive government, but certainly one that reflects the views of all New Zealanders," he said.
'Vote for change'
About three million people were registered to vote - a record number for the country - though the estimated turnout, at 78.69%, was slightly down on the previous election in 2005.

We must make the most of our advantages because the state of the global economy and the global financial crisis means that the road ahead may well be a rocky one
John Key

Profile: John Key
According to official figures, National is set to win 59 seats, Labour 43 and their allies the Greens, with 6% of the vote, eight, in the 122-seat parliament.
Mr Key told supporters that hundreds and thousands of people across the country had "voted for change".
"Today, New Zealanders have voted for action, for a safer, more prosperous and more ambitious New Zealand," he said.
But he warned of difficult times.
"We must make the most of our advantages because the state of the global economy and the global financial crisis means that the road ahead may well be a rocky one," he said.

Mrs Clark said she accepted responsibility for the result and her job as leader of the Labour Party was complete.
"I will be standing down and I will be expecting my Labour Party colleagues to elect a new leader before Christmas," she told reporters.
Though the recession loomed large in the campaign, few major policy shifts are expected once the new government takes over, analysts say.
Both Labour and National had promised tax cuts and extra spending, amid fears that the global credit crisis will hit New Zealand hard.
Maori interests
Since the country introduced proportional voting in 1996, neither of the big parties has won an outright majority and they have always relied on the support of minor parties.

Clark: 'I accept responsibility for the result'

The new government will seek the backing of the Maori Party, formed before the 2005 election to give an authentic voice to indigenous people.
However, Mr Key said his party was "diametrically opposed" to some of its policies, and Maori leader Tariana Turia said there would be hard bargaining involved in any deal.
Among Maori demands are the repeal of a law preventing Maoris from claiming rights to the foreshore and seabed, and greater control over government spending on indigenous programmes to prevent waste.

Top 6 Smartass Answers
Sometimes you manage to come back to someone with a response that's just awesome - Check out the Top 6 of those Smartass answers here!

SMART ARSE ANSWER - 6th Place
It was mealtime during a flight on a British Airways plane:
'Would you like dinner?' the flight attendant asked the man seated in the front row.
'What are my choices?' the man asked.
'Yes or no,' she replied.

SMART ARSE ANSWER - 5th Place
A flight attendant was stationed at the departure gate to check tickets.
As a man approached, she extended her hand for the ticket and he opened his trench coat and flashed her. Without blinking an eyelid she said,
'Sir, I need to see your ticket not your stub.'

SMART ARSE ANSWER - 4th Place
A lady was picking through the frozen turkeys at a branch of Sainsbury's store but she couldn't find one big enough for her family.
She asked a passing assistant, 'Do these turkeys get any bigger?'
The assistant replied, 'I'm afraid not, they're dead.'

SMART ARSE ANSWER - 3rd Place
The policeman got out of his car and the boy racer he stopped for speeding rolled down his window. 'I've been waiting for you all day,' the bobby said. The kid replied, 'Yes, well I got here as fast as I could.' When the policeman finally stopped laughing, he sent the kid on his way without a ticket.

SMART ARSE ANSWER - 2nd Place
A lorry driver was driving along on a country road. A sign came up that read ' Low Bridge Ahead.' Before he realized it, the bridge was directly ahead and he got stuck under it. Cars are backed up for miles. Finally, a police car comes up. The policeman got out of his car and walked to the lorry's cab and said to the driver, 'Got stuck, eh?' The lorry driver said, 'No, I was delivering this bridge and ran out of petrol!'

SMART ARSE ANSWER OF THE YEAR 2007
A teacher at a polytechnic college reminded her pupils of tomorrow's final exam. 'Now listen to me, I won't tolerate any excuses for you not being here tomorrow. I might consider a nuclear attack or a serious personal injury, illness, or a death in your immediate family, but that's it, no other excuses whatsoever!'
A smart-arsed chappie at the back of the room raised his hand and asked, 'What would happen if I came in tomorrow suffering from complete and utter sexual exhaustion?' The entire class was reduced to laughter and sniggering..
When silence was restored, the teacher smiled knowingly at the student, shook her head and sweetly said,
'Well, I suppose you'd have to write the exam with your other hand'.

New Zealand suffered its worst World Cup performance when being eliminated in the quarter-finals by a stoic French team at Cardiff's Millennium Stadium on Sunday (NZT).

The French produced yet another stunning performance in the vital stages of the tournament to save their own World Cup and to send New Zealand on another four year search for the Holy Grail.

It was a double blow for the Southern Hemisphere after Australia's earlier elimination by England.

New Zealand mounted a strong counter attack after the French took the lead in the 68th minute but there was no way through and the mistakes caused by the French pressure saw the strangling of the style which had dominated world rugby over the last four years.

Uncharacteristic mistakes in the heady atmosphere of Cardiff resulted in the All Blacks suffering badly and the usual assurance was lacking in the performance.

New Zealand led 13-3 at halftime but France made the stronger start in the second half.

Yet after France drew level at 13-13, it was a 62nd minute try to Rodney So'oialo that regained the lead and seemed to set New Zealand up for a comfortable run home.

However, as was the case in the so-often talked about game of 1999, the Richie McCaw-led side suffered the earliest knock out of the World Cup by an All Blacks team.

Two bad mistakes on attack cost New Zealand dearly after So'oialo's try.

Firstly replacement first five-eighths Nick Evans made a superb break and passed when he didn't need to in the tackle and then wing Joe Rokocoko made a forward pass at the back of the All Blacks from a French kick.

It was from that scrum that French replacement Frederic Michalak took the ball from fullback Damien Traille to race 40m to send second five-eighths Yannick Jauzion in for a try with halfback Jean-Baptiste Elissalde's conversion giving France a 20-18 lead.

Then Evans was forced to leave the field of play injured with McAlister moving to first five-eighths, Mils Muliaina to second five-eighths and Isaia Toeava coming on at centre.

France stuck to its kicking game throughout the first half, but it lacked the accuracy, precision and chasing game to seriously embarrass the New Zealanders, who either kicked the ball back downfield or ran it back to put plenty of pressure on the French defences.

It was tedious at times, but during the first half at least did not look to provide any discomfort for the All Blacks who further troubled the French by stealing several of their lineout throws, largely through lock Ali Williams.

Two McAlister breaks set up the first try to the All Blacks and scored the first himself after 16 minutes.

He passed to his right after scything through into the French 22m area, but didn't see flanker Richie McCaw unmarked on his right. The ball was moved from the ruck when Kelleher went to ground but lock Ali Williams was out in the corner when diving the try.

From the lineout, the French kicked to touch and wing Sitiveni Sivivatu threw a quick throw-in which fullback Leon MacDonald and brought up for the ruck. First five-eighths Dan Carter then ran and fed McAlister into another gap as he ran the perfect line.

This time he found flanker Jerry Collins in support and then stayed with him to take his pass and drive over for the try which Carter converted to give New Zealand a 10-0 lead.

The French had earlier lost blindside flanker Serge Betsen when he seemed to take a blow to the head after trying to tackle Rokocoko in the fourth minute.

McAlister was sin-binned for obstruction five minutes into the second half when the French kicked through to the All Blacks line. Beauxis landed the penalty goal.

The All Blacks went back onto attack from the restart and launched a driving assault on the French line but the play broke down when a penalty was conceded.

New Zealand regained the ball and after Carter attempted a long range dropped goal attempt the French performed the quick 22m restart the All Blacks