Dutch Prime Minister Mark Rutte has won a closely contested election, with voters handing pro-European parties a sweeping victory.
The result dispelled concerns that eurosceptics would gain sway in a core eurozone country, with voters shunning radical fringes.
With 96% of votes counted, Mr Rutte's centre-right Liberals won 41 seats in the 150-member lower house, a slender two-seat lead over the centre-left Labour Party on 39 seats, based on results early this morning.
"We won our greatest victory in history and for the second time became the largest party in the Netherlands," Mr Rutte told supporters after Labour leader Diederik Samsom telephoned him to concede defeat.
"We fought this election house by house, street by street, city by city, and I'm proud. Tomorrow I will take the first steps leading to the formation of a cabinet."
Mr Rutte declined to say which parties he would approach as coalition partners. The Liberals and Labour have played down talk of forming a coalition together.
However, parliamentary arithmetic suggests that is the most probable outcome given the highly fragmented political landscape.
"They are condemned to work with each other. It shows the Dutch people want a stable government," said Andre Krouwel, a political scientist at Amsterdam's VU University.
The hard-left Socialists, who oppose austerity and eurozone bailouts, finished a distant third and gained no ground, while the far-right anti-immigration Freedom Party (PVV) of Geert Wilders, who campaigned to leave the euro and the European Union, slumped and was set to lose nearly half of its seats.
The two radical parties dominated early stages of the campaign, raising the prospect of a massive protest vote that might paralyse government and make Dutch support for further eurozone bailouts impossible.
The unexpectedly clear result removed a potential obstacle to efforts to stabilise Europe's single currency after Germany's constitutional court gave the green light for the eurozone's permanent bailout fund to go ahead.
However, the Netherlands is likely to continue strongly resisting transfers to eurozone debtors, even if the two main parties end up forming a coalition.
