The Social Democrats topped the ruling Socialists in a national election on Sunday.

But the polls carried out by three TV networks showed the centre-right Social Democrats led by former Foreign Minister Jose Manuel Durao Barroso had failed to win the 44 percent of the vote needed to clinch a parliamentary majority.

The centre-right Social Democrat party is expected to join forces with the smaller Popular Party to form a new government.

According to provisional results the Social Democrats (PSD) won 102 seats and the Popular Party (PP) 14, which together would give them a slim majority.

Most votes were expected to be counted by the end of Monday, although the final result will not be known until 27 March, after postal ballots from voters abroad have been counted.

"Fiscal Shock"

The election campaign focused on Portugal’s economic woes and its failure to keep up with the rest of the bloc despite billions of euro in EU aid.

Portugal is one of the European Union's poorest states.

Durao Barroso promised that "a new era" had begun with his party's victory on Sunday.

He said: "I hope it will bring a richer and fairer country," adding that the Socialists had "led Portugal into extreme difficulties."

Barroso backs a "fiscal shock" policy of corporate and income tax cuts and lower government spending as a way to attract badly needed investment and boost growth in the nation of 10 million people.

"I will do everything within my power to offer Portugal a stable and credible government," Durao Barroso, 45, told cheering supporters.

But taming the soaring budget deficit in a country that affords itself a huge public administration will be a mammoth task in itself.

The European Commission only recently voted to issue a formal warning to Portugal over the size of its budget deficit.

Portugal has seen inflation rise to 4.3 percent from 2.9 percent last year, while public sector wages have been held back.

The centre-left Socialists had ruled for six years and have been blamed for the economic troubles as well allegations of corruption and mismanagement of public funds.

Portugal’s election result mirrors a trend in other European Union countries with conservative parties coming to power last year in Italy and Denmark.