Sri Lankan President Chandrika Kumaratunga's party has won 45% of the vote, with half the ballots counted in the general election.
Wickramasinghe (left) and Kumaratunga are bitter rivals
She is unlikely to win a parliamentary majority, but her party says it is ready to form a minority government.
Election monitors declared the poll generally free and fair.
Sri Lanka has been in crisis since a bitter dispute over the peace process with Tamil rebels erupted between the president and PM Ranil Wickramasinghe.
In the results declared so far, President Kumaratunga's United People's Freedom Alliance has won 26 of the 50 seats so far declared.
The United National Party (UNP) led by Prime Minister Wickramasinghe is trailing with 11 seats and about 35% of the total votes counted.
Total seats: 225
Seats declared: 50
Freedom Alliance: 26
The BBC's Frances Harrison in Colombo says the UNP appears to have lost support in its traditional stronghold - Sinhalese villages bordering the northern conflict zone that voted overwhelmingly for him in the previous poll.
A spokesman for the president said it was prepared to form a government even if it failed to win a majority.
"We are emerging the largest single party and we will form the government," the spokesman, Harim Peiris, told AFP.
President Kumaratunga may have to form a coalition government with smaller left-wing or religious parties opposing any federal solution to the conflict with the Tamil Tiger rebels.
Our correspondent adds that the results indicate that Sri Lankans are more polarised than ever before.
The Sinhalese-majority south appears to have rejected the prime minister's peace initiative, which critics said conceded to much to the Tamil Tiger rebels.
Tamil voters have strongly endorsed the Tamil National Alliance, which backs the rebels, giving it 90% of the votes counted in Jaffna.
However election monitors have called for a repoll saying voting in the north-ease was marred by "wide-spread rigging" and voter fraud.
Voting on Friday was free of violence although there were 250 complaints of intimidation or ballot stuffing during the polls,
Elections Commissioner Dayananda Dissanayake said.
But, he added: "Generally speaking, election laws were very well
A record 6,024 candidates representing 24 political parties and nearly 200 other groups took part in the election.
For the first time there were election monitors at every polling station in the country.
Turnout in the north of the island was reported to be particularly heavy as Tamils there took the opportunity to vote for the first time in a decade.
Although there were few reports of violence, Tamil parties opposing the Tamil National Alliance accused the Tigers of intimidation and malpractice.
The leader of the Eelam People's Democratic Party, Dharmalingam Sidhathan, said: "This is not a vote, it is a merry-go-round... Women are impersonating men and
officials are turning a blind eye."
If there is a hung parliament the Tamil National Alliance, backed by the Tamil Tigers, may hold the balance of power.
For more than two years there has been rivalry between the president and the prime minister, who come from different political parties.
President Kumaratunga called early elections, the third in four years, saying the ruling party had jeopardised national security in peace negotiations with the Tamil Tigers.
In another complication, a Tamil Tigers commander, Colonel Karuna, broke away from the main faction last month saying he wanted to form his own administration in the east to prevent discrimination by northern Tamils.