The Bulgarian President, Petar Stoyanov has urged former King Simeon II to form a coalition government after his party's victory at polls on Sunday.
The latest count from the Central Electoral Commission gave Simeon II exactly half of the parliament's 240-seats. Earlier results had suggested he had achieved an outright majority.
Simeon II, 64, who only settled in Bulgaria this year after more than half a century in exile, has pledged to take the country into the European Union and NATO as soon as possible, and create a "clean, transparent" government.
In calling for co-operation, the president urged the former King not repeat "the mistakes" of the previous two governments, which each had an absolute parliamentary majority.
"We have not yet crossed the river of reforms which is deep. The load must be borne on several shoulders," said President Stoyanov.
"Even if you can govern alone, it is better to use the success, the resources and experience of other political forces and other personalities," he said, in an address to the nation.
Simeon II did not himself stand for parliament, and it is not clear what role he will play in a new administration.
State of the parties in the 240-seat parliament
National Movement: 120 seats
UDF: 51 seats
Socialist Party: 48 seats
Rights & Freedoms Movement: 21 seats
Prime Minister Ivan Kostov acknowledged defeat, saying his government had demanded from the Bulgarian people a higher price than they were prepared to pay for reforming the economy.
Under the Bulgarian constitution, Simeon II could become prime minister without being an MP, but analysts have said he may prefer to pull the strings of the government from behind the scenes.
Prime Minister Kostov: "We asked too much of voters"
Pressed on whether he could be prime minister, Simeon II said: "We are not talking about my political future.
"Something unique and unprecedented has happened."
Mr Kostov's centre-right Union of Democratic Forces polled 18.2%, with the former communists close behind on 17.4%.
The Movement for Rights and Freedoms, a small party backed by Bulgaria's ethnic Turks, got 6.8%.
Prime Minister Kostov said the main reason the UDF lost was that his government was trying simultaneously to stabilise the country after a grave economic crisis in 1996-1997 and carry out reforms.
"We have taken a lot of unpopular decisions and also made mistakes," Mr Kostov said. "We wanted the voter to pay a higher price than he was prepared to pay."
Return home
Other former monarchs from eastern Europe have returned to their homelands since the collapse of communism 11 years ago, but Simeon II is the first to regain political power.
King Simeon facts
Born 1937 and ascended to the throne age six
His father was a cousin of England's Queen Victoria
Fled Bulgaria in 1946 after communists abolished monarchy
Visited Bulgaria in 1996 to popular acclaim
Turnout in the elections for the single-chamber legislature was 66.7%, with 4.5 million of the 6.3 million eligible voters taking part.
Simeon II's movement was formed only two months ago by the former monarch who was forced into exile after World War II, and has spent most of his life as a successful businessman in Spain.
He returned to his homeland earlier this year after five decades of exile, to a rapturous welcome.
His anti-corruption message has gone down well with many voters.
"Simeon is a good man, only he can save us," said one Sofia taxi driver, complaining of high-level corruption.
However Simeon II's conservative and socialist rivals accuse him of populism and empty promises.
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