Voters in Iceland are going to the polls in elections expected to oust the ruling centre-left coalition.

Opinion polls suggest Icelanders fed up with austerity have been won over with promises of tax cuts and debt relief from the centre right that presided over the nation's financial meltdown five years ago.

With promises of a quick recovery fading, voters are angered by mounting mortgage debt, rapid inflation and crippling capital controls that keep investment at a record low.

With a population of 320,000, Iceland became a European financial hub ten years ago when its banks borrowed money cheaply and lured British and Dutch savers with high returns.

Growing unchecked under a relaxed regulatory regime, the banks expanded to ten times Iceland's GDP by 2008, then crashed in a matter of days when credit markets froze in the wake of the Lehman Brothers bankruptcy.

Property prices followed, tumbling by more than 50% in some cases while real wages fell close to 30% and mortgages, often indexed to inflation, soared.

Polls favour Independence Party Chairman Bjarni Benediktsson to become the next prime minister after he took a last-minute lead from Sigmundur Gunnlaugsson's Progressive Party.

The Social Democrats, despite making late poll gains, are expected to come in a distant third.

Neither of the leading parties is likely to win a majority, leaving the Progressives and Independence to form a coalition.

The two led Iceland, often jointly, for nearly 30 years before the crash. Party insiders consider a coalition a done deal.

Iceland's 235,000 eligible voters will cast their ballots until 11pm Irish time with first results expected shortly after polls close.