The outgoing Socialist government admitted it had lost in a television broadcast following the final round of the election, which was fought largely on economic issues.

The centre-right opposition alliance of the nationalist VMRO-DPME and the pro-Western Democratic Alternative says it hopes to have an outright majority in parliament when the final results are announced late on Monday.

Opposition leader Ljubcho Georgievski - poised to be PM

The opposition toned down their nationalist rhetoric to present a moderate image during the campaign, promising economic prosperity in a country where unemployment is 30-40% and the average wage about $200.

They also dismissed socialist claims that they will destabilise the country.

Macedonian politics is complicated by the country's fragile relations with its neighbours, Yugoslavia, Albania, Bulgaria and Greece.

Kosovo question

According to BBC Balkans reporter Paul Wood the international community will be anxious to see how the new government deals with any resurgence of the conflict in neighbouring Kosovo - and especially how responds to any request from Nato to use Macedonian air space if air-strikes are threatened once again.

It is also unclear what attitude the new government will take to the country's Albanian minority.

The Albanians live mainly in the west of the country and form about a quarter of the population. Many of them have complained of oppressive treatment by the authorities.

Observers from the Organisation for Security and Cooperation in Europe (OSCE) reported the elections as "very calm and quiet".

Macedonia declared independence from Yugoslavia in 1991, the only former republic to have done so without a war breaking out.