The centre-left, underdogs right up to the closing stages of the campaign, emerged as clear winners, and the conservative coalition headed by Silvio Berlusconi and the reformed neofascist leader, Gianfranco Fini, were consigned to a reluctantly acknowledged defeat.
Projections for the Senate put the centre-left Olive Tree coalition on 44.9 per cent of the vote, with Mr Berlusconi's Freedom Alliance lagging on 39.3 per cent. In the Chamber of Deputies the score was 45.7 per cent to 41.4.
The leader of the Olive Tree, the economics professor Romano Prodi, is expected to form a government with the support of the main left-wing party, the PDS, as well as former Christian Democrats, environmentalists and a new party headed by the outgoing prime minister, Lamberto Dini.
It looks unlikely, however, that Mr Prodi will have an absolute majority and will have to rely on one of two powerful protest groups, the far-left Rifondazione Comunista and the separatist Northern League, both of which did well.
In his victory speech, Mr Prodi promised to stick to the pro-European, reformist programme presented to the electorate and pledged to work for deep constitutional reform in collaboration with the right-wing opposition. "We will be the government of all Italians, including those who voted for the other side," he said.
Voters had flocked to the booths, hoping above all for an unambiguous result to enable the country to end its chronic political instability. Political leaders on both sides had stressed the need for a government that could last a full parliamentary term of five years.
That hope will probably be tempered by the extent of the Olive Tree's debt to the smaller parties. But the victory nevertheless marked a historic turning-point for the Italian left, which has been excluded from national government since the war.
Supporters flocked to the Piazza Santi Apostoli in central Rome to wave flags, cheer and celebrate through the night. Several hundred also gathered outside the now defunct Communist Party headquarters on Via delle Botteghe Oscure to wave red flags and remember the frustration of past decades.
The Northern League, which had been written off after pulling down Mr Berlusconi's short-lived government 18 months ago, defied all expectations to poll an estimated 9.1 per cent. The League's leader, Umberto Bossi, said he wanted to remain in opposition but some deal with the Olive Tree may yet be worked out.
The big losers of the night, the Freedom Alliance, were slow to admit defeat, preferring to insist that the Olive Tree did not have the numbers to form a workable government. The result was not quite as bad as it might have been for Mr Berlusconi, whose Forza Italia had feared being entirely eclipsed by Mr Fini's National Alliance.
Forza Italia appeared to have won about 20 per cent of the vote, with the National Alliance well behind on 17 per cent. Mr Berlusconi's leadership of the coalition is likely to be challenged, but he may be strong enough to cling on.
One person to watch is Mr Dini, who is sure to play a major role, possibly as treasury minister or foreign minister. In an eve-of-election interview with the Independent, Mr Dini said the new government would have to get its economic house in order quickly to prepare for European monetary union.
"Italy is very close to qualifying for entry into the single European currency, so much so that we are being asked to get in during the first of the two phases outlined by the recent Verona summit," he said.Reuse content