George Papandreou addresses his supporters outside his party's headquarters in Athens

Amid scenes of jubilation, Greek socialists were last night swept into office with a resounding victory after more than five years of conservative rule.

With 98% of the votes counted, the centre-left Pasok party was leading with 43% – giving it 160 seats in the 300-member parliament– while the centre-right New Democracy party had 34%.

The resurgence of Pasok, led by the US-born George Papandreou, follows disillusionment with a government marred by scandal and criticised for its handling of the faltering economy and a string of natural disasters.

The outgoing prime minister, Costas Karamanlis, had called the poll midway through his term in office, hoping it would boost his legitimacy. By voting out the incumbent New Democrats so determinedly, analysts said, Greeks had shown how "fed up" they were with the abuse of power.

Conceding defeat Karamanlis said: "I take full responsibility … and will start the process for the election of a new [party] leader."

He congratulated his rival, saying in a brief speech in central Athens: "From the depths of my heart, I wish to thank the voters who backed us in these elections. I wish to congratulate George Papandreou for his victory. We hope he succeeds in the great challenge of facing the economic situation."