Socialist Prime Minister Costas Simitis accepted his
party had been defeated by the opposition conservative New Democracy.
But Mr Simitis said he still aimed to join the European single currency in 2001 and would continue his economic reforms.
He explained his Pasok party's defeat as the natural "wear and
tear" of being in power since 1996.
An exit poll suggested that the hostility of Greek voters to the country's involvement
in the Kosovo conflict had hurt Pasok's popularity.
Pasok won just 32.8% of the vote, some eight points down
on the 1996 general election, and five points down on the 1994 Euro-elections. New Democracy took 36% of the vote - a rise of nearly five points from 1996.
Both the Communists and the Left Alliance also benefited from Pasok's unpopularity, taking 8.7% (three seats) and 5.2% (two seats) respectively.
A left-wing splinter party, the Democratic Socialists (DIKKI), won two seats with 6.9% of the vote.