Sweden's center-right and center-left blocs have fallen short of a majority.
The Sweden Democrats have seen a boost in support amid concerns over immigration in the Scandinavian country.
The nationalist-populist Sweden Democrats saw their share of the vote rise from 12.9 percent in 2014 to 17.6 percent in Sunday's poll. They had been expressing hopes of a result far higher, but it still represents the largest gain by any party in the Riksdag.
If confirmed, the result translates to 63 parliamentary seats for the Sweden Democrats, up from 49 seats in 2014. Party chief Jimmie Akesson told members: "We will gain huge influence over what happens in Sweden during the coming weeks, months and years."
Prime Minister Stefan Lofven's left-leaning bloc emerged with only a slight lead in the general elections. Both Lofven's Social Democrats, the Greens and the Left Party bloc, as well as the opposition center-right Alliance won around 40 percent, well short of the required majority.
The prime minister's party lost 13 seats in parliament – their worst result in a century. Meanwhile, the junior coalition Green party even saw their support fall dangerously close to the 4 percent threshold for participation in the parliament.
Social Democrat Prime Minister Stefan Lofven said he would stay in his post for the next fortnight until the new parliament opens.
"The voters have made their choice, now it's up to all of us decent parties to wait for the final result and then negotiate (and) cooperate to move Sweden forward in a responsible way," Lofven said. He would "work calmly as prime minister with respect to the voters and Sweden's electoral system."
He called on the centrist Alliance to discuss a "cross-bloc cooperation."
Swedish PM invites 'decent parties' to talk after deadlock With just 30,000 votes separating the two groups, the 300,000 votes from Swedes living abroad and those who voted late will be key. They will only be reported on Wednesday.
Akesson and his party had made much of its opposition to Sweden's immigration policy which saw 163,000 asylum seekers arrive in the country in 2015. While the number of asylum seekers has dropped since, concerns over pressure on the welfare system, a shortage of doctors and teachers and a rise in some kinds of crime have been main election issues.
Center-right Alliance leader Ulf Kristersson called on Lofven to resign, but pushed back against any idea of an alliance with the Democrats.
"We have been completely clear during the whole election," Kristersson said of his four-party grouping. "The Allianc will not govern or discuss how to form a government with the Sweden Democrats."
The speaker of parliament is expected to consult party leaders and ask the one most likely to succeed to then form a government.
You can read this article as it originally appeared at Deutsche Welle here.
(PHOTO: Per Petterson / Flickr)