President de la Rua's popularity has plummeted
The main beneficiary is the opposition Peronist party, the Justicialist Party, of the former President Carlos Menem. It appears to have retained control of the Senate and made gains in the House of Representatives.
There was also a large protest vote, with a high percentage of people casting blank or spoiled ballots and about 30% not turning out to vote at all, despite voting being compulsory in Argentina.
President de la Rua will now spend the remaining two years of his mandate in the uncomfortable position of ruling over an opposition-controlled Congress.
The Argentinean leader said in a televised address that the voice of the people must be heard, but went on to insist that he will not change the austerity programme agreed with the International Monetary Fund to avoid the country defaulting on its $131bn debt.
Argentina, Latin America's most prosperous country, is in the midst of the worst economic and social crisis it has ever seen.
The country's unemployment rate is currently more than 16%, sparking off regular protests in the streets.
But President de la Rua has promised to stick with policies to balance the government's books in an attempt to stave off bankruptcy. In the past this has meant repeatedly cutting state salaries and pensions.
"What we are seeing now is a direct consequence of ill advised policies in the early days," Roger Nightingale, an advisor to Bank Sarasin and specialist on Latin America told the BBC's World Business Report, placing the blame squarely on economy minister Domingo Cavallo.
Default now looks more likely, he said, adding that "the real crunch comes when nobody at all will lend to Argentina, because then it has no option but to default."
Street protests
The public's anger at economic policy was demonstrated by the number of voters casting the so-called "voto bronca", the vote of anger - with almost 30% doing so in the capital alone.
Some voided ballots by leaving them blank, others by angrily writing in the names of cartoon characters like Bart Simpson and Mickey Mouse.
While others wrote angry messages aimed at the politicians across their ballot slips, such as, "stop stealing" and "you're all thieves!"
When Mr De la Rua first took office he had an approval rating of 63%, but now that has plummeted to around 18%.
Difficulties ahead
In a message to the nation after the extent of the government party's defeat was obvious, President de la Rua called for politicians to put the general interest above party politics.
"I know very well what's going on in the country, the needs and worries of the people and what they are going through in these difficult times," he said, pledging to find ways to lift the economy.
However, he did not say how this would be achieved in practice.
The Peronist party has repeatedly called for a change in economic policy but the BBC's correspondent in Buenos Aires, Tom Gibb, says that in spite of the party's new-found dominance in Congress, in practice they will have no choice but to support the government.
And in the past they have often been more helpful to the government by voting controversial measures through Congress than many in the badly divided government alliance.