The Greek Prime Minister, Costas Karamanlis, has been asked to form a new government after his party won Sunday's parliamentary poll.
Mr Karamanlis has a new mandate, albeit with a smaller majority
Mr Karamanlis' centre-right New Democracy party won 152 seats in the 300-seat parliament, a loss of 13 seats since 2004.
But his main opponents, the socialist Pasok party, also lost ground, falling to its worst result since 1977.
The poll was overshadowed by forest fires that killed dozens in August.
On Monday Mr Karamanlis met President Karolos Papoulias, who asked him to form the new government.
"We are fully aware of our responsibility and we must go forward quickly and with determination to make the country progress," Mr Karamanlis said after the meeting.
Under the constitution, Mr Karamanlis has three days to form the administration, which he has said will be smaller and contain "new blood".
His job of reforming pensions and higher education, included in New Democracy's electoral manifesto, may now be harder given the slim majority in the new parliament - only four more seats than the combined opposition.
New Democracy polled four percentage points less than in 2004 and lost 13 seats, but analysts say the loss might have been magnified by a change in the electoral system, which is now less favourable to the party that tops the poll.
However, Mr Karamanlis is the first conservative prime minister to win re-election since 1977 and conversely, George Papandreou is the first Socialist leader to lose two consecutive elections in the past 30 years.
Mr Papandreou has made a speech thanking his supporters for showing their "love and trust" in him, adding: "Pasok fought a battle and lost it."
With Mr Papandreou under pressure to resign, former Culture Minister Evangelos Venizelos has already declared his interest in becoming party leader.
Mr Karamanlis had been expected to triumph in the poll, after calling elections six months before the end of his term of office.
George Papandreou is facing a challenge for the Pasok leadership
But his support fell when many Greeks felt the government was slow to react to the forest fires, which killed 65 people.
However, the BBC's Malcolm Brabant in Athens says the prime minister rallied the nation with a steady, competent and compassionate display during the election campaign.
Mr Karamanlis has pledged to use his new four-year term to improve the economy, fight poverty, raise pensions and create a social state for the future.
He has also told the victims of the fires that the government's commitment to them would be fulfilled completely.
The Papandreou and Karamanlis families have dominated the Greek political scene for most of the past 50 years.
But both main parties suffered a fall in votes this year, with the three smaller parties from the far left and right gaining support.