|PIC1|Fernando Lugo, a mild-mannered former Roman Catholic bishop, won Paraguay's presidential election on Sunday to end more than 60 years of one-party rule.

The centre-leftist opposition leader captured 41 percent of votes to beat ruling party candidate Blanca Ovelar by 10 percentage points, official results from 92 percent of polling stations showed.

Ovelar, the first woman to run for president in Paraguay, conceded defeat on Sunday night as tens of thousands of Lugo's supporters packed a central square in the capital Asuncion.

"You've decided that Paraguay will be free and independent," the 56-year-old Lugo shouted to the jubilant crowd. "We've made history with these elections!"

Deafening firecrackers resounded throughout the city and hundreds of cars honked their horns to celebrate the downfall of the world's longest-ruling party still in power.

A smiley, gray-bearded man who often wears sandals, Lugo inspired Paraguayans fed up with conditions in the poor South American country widely known for corruption and contraband.

"We're letting off steam after 61 years of suffocation. I never saw the Colorado Party lose power. Finally, I see them in the dumps, where those thieves and rats should have been long ago," said Marcelo Corvalan, a 26-year-old student.

Lugo left his post as bishop three years ago, saying he felt powerless to help Paraguay's poor. He then launched his political career the following year and led a centre-left coalition into the presidential election, vowing to stamp out corruption and ease inequalities.

Some of his critics have tried to link him to criminals who kidnapped and killed a former president's daughter, but Lugo has denied any connection to the crime.

LEANING LEFT

Lugo calls himself an independent and has steered clear of South America's more radical left-wing leaders, such as Venezuela's Hugo Chavez and Evo Morales in Bolivia. But he is seen as a likely ally of moderate leftist presidents in the region.

During the campaign, Lugo vowed to charge more for the electricity that Paraguay exports to neighbouring Brazil and Argentina, and promised an agrarian reform to give poor peasant farmers their own plots to till, without expropriating lands.

"I'm supporting Lugo because he cared about poor people when he was bishop and I think he's honest and won't steal from the Paraguayan people like all the other politicians have," said Pedro Ramirez, a 19-year-old street vendor.

The centre-right Colorado Party has dominated Paraguayan politics since it took power in 1947, and it backed Gen. Alfredo Stroessner's brutal 35-year dictatorship until helping to oust him in 1989.

Fraud allegations and bitter divisions marred the ruling party's primary election and weakened support for Ovelar, a former education minister backed by outgoing President Nicanor Duarte Frutos.

The election-rigging and political violence predicted by many in Paraguay never materialized on Sunday, and Duarte Frutos called the election historic.

"For the first time in our history, one party will transfer power to another without a coup, without bloodshed and without fighting among brothers," he told a news conference.

Lugo will take office on August 15.

Political analysts expected no one party would win a majority in Congress, meaning Lugo will have to forge alliances in the legislature if he hopes to get his proposals passed.

The country's electoral court will not announce congressional voting results until Tuesday, officials said.

Retired army Gen. Lino Oviedo, who was freed from prison last year after the Supreme Court overturned his sentence for plotting a coup in the mid-1990s, came in third place in Sunday's election with around 22 percent support.

A landlocked country dwarfed by wealthier neighbours Argentina and Brazil, Paraguay relies economically on agricultural and hydroelectric power exports. But nearly four in every 10 Paraguayans are poor and many are weary of widespread corruption.