A centre-right coalition won Sunday’s election in Portugal but a far-right party won close to a fifth of the vote.
Although the Democratic Alliance (AD) was victorious over the weekend, it is unclear whether it can govern without support from the more radical Chega.
But AD’s leader Luis Montenegro said again that he refuses to negotiate with Chega.
Its parliamentary representation more than quadrupled to at least 48 lawmakers in the 230-seat legislature, giving the combined right a majority.
Earlier, Mr Montenegro's main rival, Pedro Nuno Santos, conceded defeat after his left-leaning Socialist Party (PS), in power since 2015, came in second by a razor-thin margin.
He ruled out supporting the AD's platform which includes across-the-board tax cuts.
"The AD won the election," Mr Montenegro told a crowd of ecstatic supporters in the early hours of Monday, adding that it was crucial for parties in the new parliament to act responsibly and "comply with the wish of the Portuguese people".
President Marcelo Rebelo de Sousa still has to formally invite the AD leader to form a government, which Montenegro said he expected to happen.
While reiterating his election promise not to rely on the right-wing populists for support to govern, he expressed hope the PS and Chega "do not form a negative alliance to prevent the government that the Portuguese wanted".
The AD and its conservative allies in the insular Madeira region won a total of at least 79 seats, ahead of the PS's 77.
Four seats were yet to be attributed after the final count of ballots from abroad.
The PS had trailed the AD in most opinion polls since Socialist Prime Minister Antonio Costa resigned in November amid a corruption investigation.
Mr Santos said his party would now lead the opposition, which could not be left in the hands of Chega.
The far-right party campaigned on an anti-establishment message, vowing to sweep away corruption and expressing hostility to what it sees as "excessive" immigration.
Chega leader Andre Ventura told reporters Sunday's vote "clearly showed that the Portuguese want a government of the AD with Chega".
He earlier said Montenegro would be responsible for any political instability if he continued to refuse to negotiate.
At the AD election night party, supporter Paula Medeiros said there was "no doubt that instability will be constant".
The result underscores a political tilt to the far right across Europe.
Portugal, which only returned to democracy after the fall of a fascist dictatorship 50 years ago, had long been considered immune to the rise of right-wing populism across the continent, which is expected to result in gains for far-right parties in European elections in June.
The PS and the Social Democratic Party (PSD), which helms the newly created AD, have alternated in power since the fall of the dictatorship in 1974.
"We have a society with no memory," lamented 21-year-old law student and PS member Alexandra Ferreira, adding that the far-right's growth made her "very sad".
Issues dominating the campaign in western Europe's poorest country include a crippling housing crisis, low wages, sagging healthcare and corruption, seen by many as endemic to the mainstream parties.
Still, under the Socialist leadership Portugal has grown at solid annual rates above 2 per cent, and posted budget surpluses of late, using the cash to slash the public debt below 100 per cent of GDP and winning praise from Brussels and investors, who do not expect the AD to abandon the path of fiscal prudence.
