Anders Fogh Rasmussen will lead the government
Liberal Party leader Anders Fogh Rasmussen announced in Copenhagen that, as expected, he had formed an alliance with the Conservatives, which he will lead as prime minister.
The government will have to rely on the support of the far-right Danish People's Party - which has not been given any cabinet seats - or on the Social Democrats, whose election support plummetted.
Senior figures in the new government will incude Liberal Thor Pedersen as finance minister, and Conservative Per Stig Moeller as foreign affairs minister.
Immigration pledge
A new post taking responsibility for refugees, immigrants and integration has been created. Liberal Bertel Haarder has been given the post, which also covers European affairs.
Another new post will cover science, technology and development.
He has previously pledged to embark on a programme which will include tightening immigration rules.
The election campaign was dominated by the issue - especially as public fears about immigrants and asylum seekers rocketed in the aftermath of the 11 September attacks.
By the time of the election, two out of three Danes wanted stricter refugee policies. Before 11 September the figure was only one in two.
Ousted leader
The election result ended almost a decade of Social Democrat-led government under Poul Nyrup Rasmussen.
And the Liberals now have more seats than the Social Democrats for the first time since the 1920s.
The election was called by Mr Nyrup Rasmussen in the aftermath of the 11 September attacks, as his popularity temporarily soared.
Correspondents say he assumed that voters would continue to rally behind his leadership in a time of international crisis.
His previous decision to call a snap election, in 1998, paid off and he was narrowly re-elected.
This time the tactic appears to have backfired, and Mr Nyrup Rasmussen - who could have stayed in office until next year - is now leading the opposition instead of the government.