Nick Clegg has acknowledged the Liberal Democrats have had a "disappointing night", despite his pre-election poll surge in the wake of the TV debates.
Mr Clegg, who said during the campaign it had turned into a "two-horse race" between his party and the Tories, may end up with fewer seats than 2005.
As he was returned as MP for Sheffield Hallam, Mr Clegg said: "We simply haven’t achieved what we had hoped."
He urged no rushed decisions if, as expected, there is a hung parliament.
Mr Clegg, who retained his seat with an increased majority, but high profile Lib Dem MPs Lembit Opik and Evan Harris lost their seats.
‘Positive campaign’
With most results in, the Lib Dem vote is up 0.9% on 2005, Labour down 6.5% and the Conservatives up 4%.
Mr Clegg said: "This has obviously been a disappointing night for the Liberal Democrats. We simply haven’t achieved what we had hoped. I’m nonetheless proud of the way we conducted the campaign.
"I think we conducted a positive campaign, full of hope, full of optimism, which I think did engage a lot of people in the election campaign, even if they didn’t then go on to vote for the Liberal Democrats."
The Conservatives look set to be the biggest party but short of an overall majority – and Britain’s first hung parliament in Britain for more than three decades is predicted.
Downing Street sources have indicated Gordon Brown will seek to open coalition talks with the Lib Dems. But Mr Clegg said everyone should "take a little time so that people get the good government that they deserve in these very difficult and uncertain times".
"Clearly the final election result is still a little unpredictable, people have voted but no one appears to have won emphatically," said Mr Clegg.
"I don’t think anyone should rush into making claims or taking decisions which don’t stand the test of time. I think it would be best if everybody were just to take a little time, so that people get the good government that they deserve in these very difficult and uncertain times."
But he said his party would be "guided by the values and the principles on which we fought this election" – fairness, responsibility in providing stability and growth to an economy and "real change to the way we do politics".
He also expressed dismay at voters who were turned away from polling stations which could not cope with increased turnout: "That should never, ever happen again in our democracy."
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