Belgians have voted to oust the coalition government of centre-right Prime Minister Guy Verhofstadt after eight years in power.
Mr Leterme wants Belgium's regions to have more power
In the key Dutch-speaking region of Flanders, Flemish Christian Democrats made big gains. With 95% of votes counted, they had 30 of 150 seats.
Mr Verhofstadt has admitted defeat and will offer his resignation to King Albert on Monday.
The Christian Democrats will start lengthy talks to form a new coalition.
Negotiations are expected to take at least a month.
Leader of the Christian Democrats, Yves Leterme, immediately called for constitutional changes to devolve power to the regions - Dutch-speaking Flanders, in the north, and French-speaking Wallonia, in the south.
"It is time for change. People want a different course," Mr Leterme said.
He has previously caused controversy by saying that a united Belgium was an "accident of history" and that the country has no "intrinsic value".
Ceding defeat, Mr Verhofstadt said he had done his best but he was to blame for his party's loss at the polls.
"It has been an honour to lead the country and its people. I take personal responsibility for the results," he said.
His Flemish Liberal Democrats party slumped to fourth place with 18 seats, just ahead of the far-right Vlaams Belang - Flemish Interests - party, which won 17 seats.
The French-speaking Reform Movement took second place with 22 seats, while the French-speaking Socialists won 21.
No single party bridges the linguistic and geographic gulf between Belgium's two regions.
Traditionally, the prime minister comes from one of the majority Flemish parties.