Democrat Hillary Clinton defied the polls and narrowly upset Barack Obama in New Hampshire on Tuesday, breathing new life into her U.S. presidential campaign after a poor third-place finish in Iowa.

Republican John McCain, meanwhile, capped his rise from the political scrap heap with a win over Mitt Romney that resurrected his once-struggling presidential campaign.

The win for Clinton, who faced a flood of polls showing her losing badly, set up a tough and possibly lengthy battle with Obama as the Democratic race heads on to contests in Nevada and South Carolina.

"I listened to you and in the process I found my own voice," Clinton told wildly cheering supporters in Manchester. "Let's give America the kind of comeback that New Hampshire has just given me."

The victory by McCain, an Arizona senator, put him in the middle of a wild scramble for the Republican nomination for the November election after being written off this summer, when he was low on cash and shedding campaign staff.

"Tonight, we sure showed 'em what a comeback looks like," McCain told a crowd of supporters in Nashua who repeatedly chanted "Mac is back!"

Both New Hampshire races were close. Clinton beat Obama by 39 percent to 37 percent, while McCain won over Romney by 37 percent to 32 percent in almost complete returns.

New Hampshire's primary is the second high-profile battleground, following Iowa, in the state-by-state process of choosing Republican and Democratic candidates for November's election to succeed President George W. Bush.

The race to replace Bush, whose popularity at home and abroad has plunged due to the war in Iraq, moves into a new stage heading up to Feb. 5 when 22 states hold nominating contests that could decide who will face off in November.

Obama, the Illinois senator bidding to be the first black president, had hoped for a New Hampshire win that would solidify his hold on the top spot in the race to be the Democratic candidate and deal a second consecutive humiliating loss to Clinton, the former front-runner.

STILL FIRED UP

Obama congratulated Clinton on her victory, but added, "I am still fired up and ready to go."

"This moment, in this election, there is something happening in America," Obama said.

The win put Clinton, who became emotional on Monday when talking about her quest for the presidency, back in the thick of the race. A loss would have saddled the former first lady with new questions about the viability of her campaign.

Exit polls said Clinton won big among women and older voters, while the young voters who propelled Obama to victory in Iowa did not turn out in big numbers in New Hampshire.

Ann Lewis, a senior adviser to Clinton, said she would be adding staff at all levels as the race moves forward to more states.

Obama won Iowa last week, with Clinton third behind second-place finisher John Edwards, the former North Carolina senator. Edwards finished third in New Hampshire but promised to fight on.

"Two races down, 48 states to go," Edwards said.

In the Republican race, McCain overcame long odds to repeat his New Hampshire win in 2000, when he ultimately lost the nomination to Bush.

McCain, a former prisoner of war in Vietnam, angered the conservative base of his party with his support earlier this year for a now-dead Senate bill that would have given illegal immigrants a path to citizenship.

But after overhauling his campaign staff and recalibrating his strategy, he began to focus on New Hampshire, talking to residents in repeated town hall meetings.

"When the pundits declared us finished I told them I'm going to New Hampshire, where the voters don't let you make the decision for them," McCain said.

Romney, the former governor of neighboring Massachusetts, promised to push on despite pouring tens of millions of dollars of his personal wealth into the presidential race and not managing a breakthrough win.

He finished second to former Arkansas Gov. Mike Huckabee in Iowa's kick-off contest last week. Huckabee, the Baptist minister whose Iowa rise was fueled by his support from religious conservatives, was third in New Hampshire.

Clinton, a New York senator and former first lady, and Romney were both under intense pressure to revive their campaigns after disappointing showings in Iowa.

There were long lines at polling places in New Hampshire amid predictions of a record turnout during the most wide open U.S. presidential race in more than 50 years, with no sitting president or vice president seeking the nominations.

The presidential race now begins to branch out quickly to more states, with Michigan voting next Tuesday, Nevada and South Carolina Republicans on Jan. 19 and South Carolina Democrats on Jan. 26.

South Carolina looms as a potential showdown state in both parties. For Democrats, Obama possibly holds an advantage in a state where more than half of Democratic primary voters are expected to be black.

Michigan is next for Republicans, and McCain, Romney and Huckabee are all looking for wins there. McCain won the state in 2000, Romney grew up there as the son of a former governor and auto executive, and Huckabee will look to make inroads with the state's evangelicals.