The BBC's George Eykyn:"The results spell political change"

The party - whose leader, Joerg Haider, has in the past praised Nazi policies - came second, only 6% behind the ruling Social Democrats.

The Freedom Party says results from more than 200,000 postal ballots could push it into the lead. That count could take a week to 10 days.

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The party campaigned on an anti-immigration ticket, despite Austria having the second-lowest immigration in the whole of the European Union.

The Social Democrats suffered dramatic losses and its coalition partner, the conservative People's Party, was pushed into third.

The BBC's Katya Adler:"There will be weeks of political uncertainty"

The BBC's Katya Adler in Vienna says the result heralds a dramatic change in Austrian politics, sounding the death-knell for the 'Grand Coalition', which has governed for the last 13 years.

The leaders of the country's four parliamentary parties will meet the Austrian President, Thomas Klestil, on Monday to discuss possible coalitions.

The Social Democrat leader and current Austrian Chancellor, Viktor Klima, has ruled out calling on Mr Haider's support.

Chancellor Viktor Klima: Not resigning

He said he would "hold talks with all democratic parties except the Freedom Party".

He said his first choice of partner remained the People's Party.

The People's Party leader, Wolfgang Schuessel, said he would stand by his pre-election pledge to go into opposition if beaten into third place.

But he refused to concede defeat and predicted that his party would yet overtake the Freedom Party - just 14,000 votes ahead.

The BBC's Nigel Glass reports: "Some observers predict political instability"

Possible combinations of government include a conservative right-wing or conservative left-wing coalition, or a minority Socialist government.

Some observers are predicting such political instability that another election will be necessary within a year.

Key issues

Mr Haider said his party had "risen with a sensational election result."

The 49-year-old once praised Hitler's "orderly" employment policy and described Waffen SS veterans as "decent men of character".

Joerg Haider votes with his wife

But he stirred up Austria's political landscape in the run-up to elections.

He promised an Austria for Austrians with more help for those who have been affected by the government's austerity budget.

The nationalist leader also said he would stop Austria being swamped by foreigners.

Austria is one of Europe's richest countries and has one of the EU's lowest unemployment levels.

But before the election the governing coalition was split over key issues like the degree of liberalisation of the economy and whether Austria, which has been neutral since 1955, should join Nato.

For the new administration, pensions will remain a key issue. By the year 2010, the number of pensioners in Austria will significantly outnumber the national workforce.

Austrian EU Commissioner Franz Fischler earlier launched a scathing attack on the Freedom Party, accusing it of an anti-foreigner, anti-EU philosophy which would damage the country's international image.

Another respected statesman, former Chancellor Franz Vranitzky joined the attack, warning that Austria risked isolation if the party were allowed to gain a foothold on power.