Iceland is facing the prospect of tough coalition negotiations after the anti-establishment Pirate Party and its allies gained ground. Their failure to win a majority has left many voters disappointed, however.
The Pirates and three left-of-center allies won 27 seats, five short of the 32 needed to command an overall majority in the 63-member Althing, often described as the world's oldest parliament.
The left-leaning coalition is made up of the Pirate Party, with 10 seats (14.5 percent); the Left-Green Movement, with 10 seats (15.9 percent); the Social Democratic Alliance, with three seats (5.75 percent); and Bright Future, with four seats (7.15 percent).
The conservative Independence Party emerged top, with 29 percent of the vote, and gained two seats for a total of 21, Iceland's Monitor news website reported. Formed earlier this year by disgruntled members of the Independence party, the Regeneration party achieved 10.5 percent of the vote.
The Progressive Party, took a severe battering, losing 11 seats to end up with just eight, or 11.5 percent of the vote, dropping 13 percentage points.
"We are very satisfied," said Pirates co-founder Birgitta Jonsdottir, an activist, poet and WikiLeaks supporter.
"We are a platform for young people, for progressive people who shape and reshape our society … like Robin Hood because Robin Hood was a pirate: We want to take the power from the powerful and give it to the people," Jonsdirror told the AFP news agency.
Prime Minister Sigurdur Ingi Johannsson told the broadcaster RUV that he would resign on Sunday after his Progressive Party suffered a fall in support.
With 30 women MPs, Iceland has now also over taken Finland and Sweden to become the parliament with the highest proportion of female members - over 47 percent - in Europe.
Five parties failed to garner enough votes to cross the 5 percent threshold needed to enter parliament.
Turnout in Saturday's election was 79.2 percent, a historic low. Iceland has 246,500 eligible voters.
jlw/mkg (AFP, AP, dpa)