With more than 500 general election results in out of 650, the BBC is predicting a hung Parliament with the Conservatives as the largest party.
Labour cannot now win a majority, but it is not clear which party will be in a position to form a government.
Conservative leader David Cameron said it was "clear that the Labour government has lost its mandate to govern".
Gordon Brown may start coalition talks with the Lib Dems, who, Nick Clegg admitted, had a "disappointing night."
The BBC projection suggests David Cameron's Conservatives will have 306 seats. If there are 10 Unionists elected in Northern Ireland then Mr Cameron might be able to command 316 - probably still slightly too few for him to be sure of winning a Queen's Speech.
But Labour and the Lib Dems together would have 317 seats, according to the BBC figures, which even with three SDLP MPs would still leave them at 320 - again probably just a few votes short.
Senior Labour figures have said that under the rules of Britain's constitution, the sitting prime minister in a hung parliament makes the first attempt at forming a ruling coalition.
Business Secretary Lord Mandelson said Mr Brown had returned to Number 10, and was going to rest and "catch his breath" adding: "We have to be patient for some time more."
"It's not possible to make definite claims or reach final conclusions about the outcome of the election because there are results still to come in," he said.
"You could say the electorate have voted for change but what they haven't done is voted decisively in favour of the Conservatives."
But shadow schools secretary Michael Gove said voters would not be "entirely happy" if Mr Brown "after a defeat like this, were to try to cling on and try to form some sort of coalition of the defeated, some sort of alliance of the dispossessed".
With most results in, the Lib Dem vote is up 0.9% on 2005, Labour down 6.5% and the Conservatives up 4%.
Turnout is running at 65.2%, a modest increase on the 2005 general election.
Here at Greengates Builders Merchants Accrington, Lancashire we are hoping the results that are obtained from the election are going to make a positive impact on our country!