The separatist Bloc Quebecois held on to a majority of the 75 seats reserved for Quebec in the 301-seat national parliament but lost its position as official opposition to the Reform Party, led by an uncompromising Preston Manning, whose hard line against any concessions toward Quebec's French- speaking majority boosted his support in Western Canada.
Mr Chretien paid a stiff price for his party's political opportunism, having called an election a year and a half before it was required. Although his position is secure in the short run, his lustre has been tarnished and there may be pressure for him to step aside before Quebec holds another referendum on sovereignty. In the meantime, with a majority of only four seats and five official parties in the House of Commons, the government will have to be particularly nimble in negotiating support among the opposition parties for major measures.
Mr Chretien receives some credit for winning two majorities in a row, the first time the Liberal Party has been able to do that since the Second World War. But the prime minister had promised more when calling the vote and had sought an overwhelming mandate to give him new bargaining power with the Quebec separatists and the political stature to implement some new, as-yet-undefined resolution, with the support of other parts of the country.
Mr Manning's position as leader of the official opposition enhances his ability to confront the government and provides additional resources for party organisation. But though the Reform Party with 60 seats gains new clout in Parliament, the results amount to a disappointment for Mr Manning personally and for the political ideas he has promoted.
Reform had poured immense resources into the election battle in Ontario, the largest and richest province, which accounts for one third of the total seats in Parliament. But the party lost the one Ontario seat it had, and it also failed to make a breakthrough in rural areas.
An extensive television advertising campaign in which the Reform Party attacked the predominance of Quebec-based politicians in the national unity issue and questioned whether a prime minister from Quebec was capable of negotiating with the Quebec separatists appeared to have backfired.
The result was a more concentrated support in Western Canada. It probably also means checkmate for Reform's ambitions to become a truly national party with an agenda based on reducing the role of central government, a scaling back of social spending, and tax cuts.
Jean Charest, the young and charismatic leader of the Conservative Party was the unrewarded hero. He inherited a dispirited shell of a party that had been reduced to two seats in the 1993 election, mainly as a reaction to nine years of government led by former prime minister Brian Mulroney.
Mr Charest has been rebuilding the party and electrified the campaign with his performances in televised leaders' debates. In Quebec, he shook many of the "soft nationalists" out of the separatist camp and was the big factor in Bloc Quebecois' decline in seats.
But he added only three seats because the way the votes split among the major parties running in Quebec benefited the Liberals. Similarly in Ontario, the revitalised Conservatives split the right-of-centre vote with the Reform Party, and the Liberals won 99 of the 103 seats.
As a result of all of the fractures and vote splits, the Conservatives came in second only to the Liberals in popular vote, but fifth party in the House of Commons.
Seats (percent of vote):
Liberal Party: 155 (38)
Reform Party: 60 (19)
Bloc Quebecois: 44 (11)
New Democratic Party: 21 (11)
Progressive Conservatives: 20 (19)
Others: 1 (2)
Turnout: 66.7 percent