Helen Clark, New Zealand's PM, ousted by wealthy investment banker John Key

Her Labour government was defeated by the National Party, led by John Key, 47, a multi-millionaire former investment banker. She surprised supporters by immediately resigning as Labour leader.

Although a relative political novice, the affable Mr Key won over voters by invoking the mantra of Barack Obama in the American election campaign: "It's time for a change."

But the departure of Miss Clark, the country's first elected female leader, means New Zealand is no longer among the handful of countries around the world where a woman heads the government. There are now just five remaining: Germany, the Philippines, Argentina, Chile and Liberia.

The vagaries of New Zealand's proportional representation system mean the total number of MPs varies. Of the 122 seats in the new parliament, the National party won 59.

Mr Key will easily be able to form a governing coalition with smaller allies including the business-friendly Act Party and United Future, making a total of 65. Labour and its allies, the Greens and the Progressive Party, could muster only 52 seats between them.

The indigenous Maori Party, which won five seats, was disappointed in its hope of holding the balance of power, but Mr Key promised to talk to them about inclusion in his government.

National's win was on an impressive scale, with several once-safe Labour seats falling. In his victory speech, Mr Key told jubilant supporters: "I can't tell you how good it is to be here. Today New Zealand has spoken. In their hundreds of thousands across the country, they have voted for change."

He referred to his upbringing in poverty in a council house, saying: "What inspired me then inspires me today. New Zealand has so much potential. This is not as good as it gets."

Defeat came as a bitter blow to Miss Clark, who had achieved an unprecedented three consecutive terms for Labour and was committed to a fourth.

In congratulating Mr Key on his victory, she said: "Tonight is not our night."

Announcing her decision to step down as leader, Miss Clark said she would stay on in parliament as MP for her Mt Albert constituency in Auckland.

Miss Clark spoke of her pride in what the party had achieved over nine years in government, adding: "I just utter one fear, and that is that I do hope that all we have put in place doesn't go up in flames on the bonfire of Right-wing politics."

The other big loser was Winston Peters, a maverick politician who had served as Foreign Minister for the past three years in Miss Clark's government.

His New Zealand First Party failed to win any seats, ending his 30-year career in parliament.

Mr Key's first big challenge will be the economy, which has languished in recession for much of the year after the longest period of growth in a generation.

He has promised tax cuts and more spending on infrastructure.

Returning as an Act Party MP is Sir Roger Douglas who, as Finance Minister in the 1980s, introduced a controversial package of reforms known as "Rogernomics", modelled on Thatcherite economic policies.

Mr Key attracted many wavering voters with his pledge to maintain generous social welfare policies put in place by Labour.

Analysts say his determination to do so will be tested by insistent voices from Act, and the Right-wing of his own party, calling for radical reform of public spending.