By Jonathan Isaby
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4.45pm update: David Cameron has phoned to congratulate the new Portuguese Prime Minister, Pedro Passos Coelho. A Downing Street spokesman said of the conversation:
"Mr Cameron emphasised his commitment to the longstanding alliance between Portugal and the United Kingdom and said that he looked forward to working with Mr. Passos Coelho to strengthen this further. The Prime Minister said that he was grateful for Portuguese support of the action to implement UNSCR 1973 in Libya. Both leaders agreed on the need to work together to boost economic growth in Europe, generating more opportunities for business and creating jobs."
Yesterday's general election in Portugal saw its Socialist government pay the price for the economic crisis it oversaw which resulted in a €78 billion bailout from the EU.
The Social Democrats – who are defined as a centre-right party, despite their name – won 105 seats, whilst the Socialists retained just 73 seats. Meanwhile, the more socially conservative CDS-PP won 24 seats, and they are now expected to be the junior partner in a new Social Democrat-led government.
The new Prime Minister is set to be Pedro Passos Coelho, who has led the Social Democrats since March 2010, and is going to have to implement a range of austerity measures to try and restore international confidence in the Portuguese economy.
The BBC reports him as saying:
"I want to guarantee to those who are watching us from abroad that Portugal does not intend to be a burden for the future to other countries that lent us the means that we needed today to face up to our responsibilities."
Socialist leader Jose Socrates has already resigned as leader of his party in the wake of the defeat.
Below is a report from Sonia Gallego for Al Jazeera on the election results.