Dutch pro-Europe parties win heated election

But exit polls give caretaker prime minister Mark Rutte's Liberals 41 seats and the centre-left Labour Party 39 in the 150-member lower house with hardliners on both sides of the political divide losing considerable ground.

Pundits had initially predicted the two would only grab 70 seats.

"We won our greatest victory in history and for the second time became the largest party in the Netherlands," said Rutte.

The far-left Socialists, who had campaigned against austerity and eurozone bailouts, are likely to end up with just 15 seats.

Meanwhile, firebrand Geert Wilders of the anti-immigration Freedom Party had campaigned for the Netherlands to leave the euro and the European Union. The verdict has hit Wilders' party the hardest - his party is set to lose about a third of his seats, dropping from 24 to 13.

The far-left's anti-austerity message had ignited debate on Europe's future and the Netherlands' role in the Union in the run-up to the vote.

The Liberals and the Labour parties backed the eurozone rescue packages, criticised by hardliners.

The snap election came after Rutte's minority coalition collapsed in April over disputes on the country’s obligation to meet its EU budget deficit targets in 2013. Wilders' had opposed the welfare cuts required to meet the Brussels-imposed target.

The EU quickly praised the result, with home affairs commissioner Cecilia Malmstrom tweeting; "Pro-European parties win in Dutch elections. Good news."

The Dutch elections are being seen as a reflection of broader public sentiment in the EU, with the results coming on the same day that Germany's constitutional court rejected legal challenges against the eurozone's bailout fund.

The result assuages fears that a fiercely anti-Europe Dutch parliament would have threatened the EU's efforts to solve the euro-crisis.

On the last leg of his campaign trail, Rutte told voters that he would not sign the country up to a third Greek bailout despite VVD party promises to do everything to keep the eurozone in order.

He is to begin the task of forming a new government later on Thursday in a process which could take months.

Labour's new leader, Diederik Samsom, while campaigning won a string of TV debates which helped propel him into the limelight. Experts say a coalition between the two is likely.