The Freedom Party, whose leader, Joerg Haider, has been accused of Nazi sympathies, came second in the poll, only 6% behind the Social Democrats.

The Social Democrat leader, Chancellor Viktor Klima, has promised to keep the Freedom Party out of government and says he wants to retain the existing partnership with the conservative People's Party.

However, political analysts have interpreted the success of the Freedom Party as voter protest against the longstanding coalition of Social Democrats and the People's Party.

The charismatic Joerg Haider is well known for praising Hitler's "orderly" employment policy and for describing Waffen SS veterans as "decent men of character".

Mr Haider based his campaign on anti-foreigner and anti-immigration rhetoric. He blamed immigrants for unemployment and promised more support for Austrian families.

International anger

Israeli reaction to Austria's general election results has been one of dismay. The headline at the top of Yediot Ahronot, the country's largest newspaper, read: "One Out of Every Four Austrians Chose a Neo-Nazi Chancellor".

Chancellor Klima: no coalition with Haider

The general secretary of Germany's ruling Social Democrats, Franz Muentefering, said: "The Freedom Party has played off people's resentments with unfulfilled promises and barely disguised demagoguery".

Many European newspapers were unable to resist a reference to Adolf Hitler in their headlines. "A New Hitler in Austria?", was the headline in Italy's La Republica.

The Times, in London, said: "The ghosts of the Nazi past have never been properly exorcised in the land of Hitler's birth".

In Belgium the Dutch-language daily, De Standaard, asked whether far right parties in other countries would make gains, as voters become increasingly dissatisfied with traditional parties.

Austria on brink of change

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

Whatever the final outcome, analysts say the result heralds a dramatic change in Austrian politics.

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

The BBC's Katya Adler in Vienna says it has sounded the death-knell for the "Grand Coalition" which has governed for the last 13 years.

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

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