With most of the votes counted, Chancellor Gerhard Schroeder's Red-Green coalition appears to have scraped back into power, but with a razor-thin majority.

We will cross our fingers

Gerhard Schroeder

Mr Schroeder and Green Foreign Minister Joschka Fischer made a triumphant appearance in front of the Social Democrat (SPD) faithful as results began to indicate the team had secured a new four-year term.

Latest results from ARD television give them a four-seat majority in the parliament, or Bundestag, with a total of 305 seats.

Conservative challenger, Edmund Stoiber, has indirectly conceded he will not be forming a government.

"If we can't form this government, the Schroeder government will only be able to govern for a very, very short time," he said.

Earlier, he had claimed victory for his CDU/CSU alliance, with a large leap forward from 1998's devastating defeat, but it now looks that he will not make it into power.

"One thing is clear - the CDU/CSU has won the election... it is the strongest party," he said in his first post-poll comments at his campaign headquarters in Berlin.

He has now returned to his home region of Bavaria where he was given a hero's welcome and he praised the CSU's "fantastic contribution" to the conservatives' success.

Seats forecast

SPD: 250 CDU-CSU: 247 Greens: 55 FDP: 47 Source: ARD TV

But as results came in, his initial lead has dropped away.

He now stands neck and neck with the SPD with 38.5% of the vote and, according to current prognoses, will not be the largest party in parliament.

Meanwhile, Mr Schroeder's smile has been growing wider over the course of the evening.

Pained: Schroeder hears the first results forecasts

In his first public appearance after the polls closed, a subdued Mr Schroeder told his supporters to keep their fingers crossed.

"Sometimes those who celebrate early are celebrating too early," he said presciently.

Later, he joked with Mr Fischer about their plans for the coming term.

Correspondents say the Red-Green coalition faces at best a much reduced majority, whereas the centre-right has, if nothing else, made a big comeback after its humiliation in a party-funding scandal four years ago.

Anti-war rhetoric

The nailbiting finish came after an election campaign, dominated in its closing stages by divisions over the US's planned military action towards Iraq, and accusations from Mr Stoiber that his rival's anti-war rhetoric was damaging relations with Washington.

We are hugely, hugely happy

Green co-leader, Claudia Roth

BBC Berlin correspondent Rob Broomby says that if Mr Schroeder is spared the fate of being the first chancellor since the war to fail to be re-elected, he has the Greens to thank for it.

Click here to see past results for the two main parties

They performed better than expected, leading the FDP by more than 1%, and compensating for the SPD's shortfall of less than 1%in its duel with the Christian Democrats.

The co-leader of the Green Party, Claudia Roth, said: "We are hugely, hugely happy."

	SPD Social Democratic Party CDU/CSU Christian Democratic Party / Christian Social Union FDP Free Democratic Party (Liberals) Greens Green Party PDS Party of Democratic Socialism Click here for party programmes

Another party leader, Fritz Kuhn, said the SPD would have to take into account the Greens' increased strength in any future government.

FDP leader Guido Westerwelle said: "We all feel that this is a disappointing election night for us."

The party is thought to have suffered when, in the final days of the campaign, deputy leader Juergen Moellemann attacked the policies of Israeli Prime Minister Ariel Sharon, prompting accusations of anti-semitism.

Even before the polls closed, the party leadership asked for Mr Moellemann's resignation.

Mr Stoiber said were it not for the FDP's result, his party might easily have formed a government.

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