Athens  - Greece's socialists under the leadership of George Papandreou won a landslide election victory on promises that they would jump-start an ailing economy which is on the verge of a recession.

Sunday's elections, which pitted the heirs of two of the most powerful political dynasties - Papandreou against Conservative Prime Minister Costas Karamanlis - were seen as critical for implementing reforms needed in the eurozone's second-poorest member.

"We stand united to face the big responsibility to change our country into a nation of justice, solidarity, humanity and green development," Papandreou told cheering supporters after nearly 99 per cent of the votes counted showed his party winning 44 per cent of the vote and 160 out of 300 parliament seats, according to the official Interior Ministry website.

The conservatives, falling out of favour with many voters in the wake of a series of financial scandals leading to the worst riots Greece has seen in decades last December, came second with 33 per cent and 91 seats in parliament.

Tens of thousands of supporters of the socialist PASOK party celebrated into the early hours of Monday in major cities across the country, waving green flags and honking car horns.

Karamanlis was set to formally resign the office of the prime minister to Papandreou on Monday.

"I had faith that my economic policies are necessary to take the country out of the economic crisis but voters did not select this route," he said in his concession speech.

Papandreou, the son and grandson of two former prime ministers, may be a reminder of old times. But in the five years he has headed the main opposition he has fought hard for a radical reform of the party.

With many Greeks sceptical of a party whose old guard had been tainted by allegations of scandals and complacency in the past, Papandreou is determined to bring transparency into Greek politics.

The socialists will have to deal with a faltering economy after years of considerable growth, as well as high unemployment and a budget deficit exceeding 6 per cent of the gross domestic product.

Poor state revenues forced the conservative government to resort to borrowing 52 billion euros (76 billion dollars) so far this year in order to finance a budget which still has a widening deficit.

PASOK has promised a new approach to the economic crisis, including a 3-billion-euro stimulus package, and proposing heavier taxing of the rich and helping the poor.

In contrast, conservative leader Costas Karamanlis had called for two years of tough reforms such as public sector wage freezes.

Opinion polls over the past few months indicated Greeks had grown fed up with five years of conservative rule that began with high hopes to save the faltering economy but ended with cases of scandal and corruption.

"I feel like this is a new start - that finally we can bring this country forward like other countries in Europe," said 25-year-old hairdresser Georgia Papadaki.

Experts say attention will now be on whether Papandreou will appoint a new generation of talented younger economists and environmentalists to help run the country rather than the older generation of diehard socialists.

During his election campaign, Papandreou announced a 100-day plan to bring five draft bills to parliament, aimed at helping small business. He called for above-inflation pay rises and a reformed tax system that will put a heavier burden on the rich.

He also vowed to keep down the bureaucracy while he creates new ministries for the economy, the environment and citizens' protection. He said he would reduce the current 16 ministries to fewer than 15, including the new ministries, indicating his intention to consolidate other branches of government. (dpa)