David Cameron says he hopes to govern for all of the UK as a BBC forecast gives the Tories 329 seats – enough to form a slender majority in the Commons.
His party made gains in England and Wales, including taking Ed Balls’ seat.
Two senior Labour sources have told the BBC that Ed Miliband is expected to stand down later after Labour was all but wiped out by the SNP in Scotland.
The Lib Dems are heading for as few as eight MPs, with Vince Cable, Ed Davey and Danny Alexander losing their seats.
The BBC forecast, with 635 of 650 seats declared, is Conservative 329, Labour 234, the Lib Dems eight, the SNP 56, Plaid Cymru three, UKIP one, the Greens one and others 19.
The Conservatives are expected to have won a 37% share of the national vote, Labour 31%, UKIP 13%, the Lib Dems 8%, the SNP 5%, the Green Party 4% and Plaid Cymru 1%.
In other election developments:
- Ed Miliband is expected to make a statement about his own future later after what he said was a “difficult and disappointing” night for Labour
- Following a recount, Shadow Chancellor Ed Balls lost his Morley and Outwood seat to the Conservatives by just over 400 votes
- Nick Clegg has held on to his Sheffield Hallam seat but said it had been a “cruel and punishing night” for his party and he would be making a statement on his future later
- George Galloway, who was reported to the police for retweeting an exit poll before voting ended, has lost to Labour in Bradford West
- Scottish Labour leader Jim Murphy and shadow foreign secretary Douglas Alexander have lost their seats to the SNP
- UKIP polled strongly in the North of England and Douglas Carswell has retained his Clacton seat but Mark Reckless has lost his seat and Nigel Farage could fail to win Thanet South
- Former Lib Dem leader Charles Kennedy lost his seat to the SNP in Ross, Skye and Lochaber
- Conservative minister Esther McVey has lost Wirral West to Labour
- The Green Party is predicted to get one seat after Caroline Lucas retains the Brighton Pavilion constituency she won in 2010
- With 16 seats left to declare, turnout is expected to be 66%, marginally up on 2010.