Alexis Tsipras has said his leftist Syriza party's win at a Greek general election is a "great victory of the people," and announced a continuation of the party's coalition with the right-wing Independent Greeks (ANEL).
Tsipras, who appeared at a rally of supporters in Athens alongside ANEL leader Panos Kammenos, said he felt "vindicated" in calling the poll after quitting in August.
Greece's largest opposition party, the conservative New Democracy party, has conceded defeat as counts show Tsipras and Syriza are set to return to power in Greece.
At present, with 63% of votes reported, Syriza are on track for 35% of the vote share and 144 seats, just short of a majority of 151. Centre-right New Democracy are headed for 75 seats with 28% of the vote, while neo-Nazi Golden Dawn is set for 19 seats with 7%.
In total, eight parties are predicted to have representation in the next parliament.
Shona Murray reports from Athens:
Declaring his victory, Mr Tsipras said: "In Europe today, Greece and the Greek people are synonymous with resistance and dignity, and this struggle will be continued together for another four years.
"We have difficulties ahead, but we are also on firm ground. We wont recover from the struggle by magic, but it can happen with hard work."
A Syriza party spokeswoman said the party would implement the bailout deal it previously agreed with European Union lenders.
Olga Gerovassili said: "This will be a four-year term government with a strong parliamentary majority, which will implement the programme it promised.
"It will continue the tough negotiations with the lenders, realising that this is the beginning of a battle."
This is the fifth general election in the country in six years and was triggered by Mr Tsipras's resignation as prime minister last month.
The move was designed to refresh his mandate but may have backfired as conservative leader Vangelis Meimarakis has gained ground during the three-week campaign. Both men have rarely been half a percentage point apart in the opinion polls.
Mr Meimarakis has accused him of breaking promises by abandoning his anti-bailout stance and negotiating an €86bn package with EU creditors.
Amid fears of a low election turnout, Mr Tsipras had urged people to come out and vote.
Based on the early results, the turnout was 55.4% while the January election was won by Mr Tsipras with 63.6% of the vote.
The election was closely watched in Europe.
The head of the Eurogroup Jeroen Dijsselbloem congratulated Mr Tsipras on his win and said he looked forward to the swift formation of a new government with a strong mandate to continue implementing the bailout deal.
French President Francois Hollande said the victory was an "important success" for both Greece and Europe.
He said: "This is an important outcome for Greece which will now live through a stabilisation period with a solid majority."
