Opposition leader Morgan Tsvangirai will beat President Robert Mugabe in Zimbabwe's crucial election, but be forced into a runoff vote in three weeks, according to a ruling party projection.

Two ZANU-PF party sources said on Tuesday the projection showed Tsvangirai falling short of the 51 percent needed for outright victory. It was similar to projections by an independent monitoring group.

A spokesman for Tsvangirai's Movement for Democratic Change denied a New York Times report that Mugabe's advisers were negotiating his resignation with the MDC because Mugabe considered the prospect of a runoff demeaning.

"I can confirm that there are no talks with Mugabe," said MDC spokesman Nelson Chamisa when asked about the story on the New York Times Web site.

Mugabe, in power for 28 years, faced his most formidable challenge in the election, with both Tsvangirai and third candidate Simba Makoni, a former finance minister, accusing him of reducing the population to misery.

The opposition and international observers said Mugabe rigged the last presidential election in 2002. But some analysts say the groundswell of discontent over an economy in freefall is too great for him to fix the result this time without risking major unrest.

Zimbabweans are suffering the world's highest inflation of more than 100,000 percent, food and fuel shortages, and an HIV/AIDS epidemic that has contributed to a steep decline in life expectancy.

NO PRESIDENTIAL RESULTS

No official results have yet emerged on Saturday's presidential poll. The opposition charges that the delay veils attempts by Mugabe to hang on to power by rigging the vote.

Official results on Tuesday showed ZANU-PF with a narrow lead of two seats in the parliamentary poll with 131 out of 210 constituencies declared. But a breakaway opposition party took another five seats.

A third government minister lost his seat and results showed the opposition Movement for Democratic Change (MDC) making some inroads into Mugabe's traditional rural strongholds.

The MDC said Tsvangirai had won 95 percent of rural constituencies where the results were known.

Two senior government sources who asked not to be named said their projections showed Tsvangirai getting 48.3 percent, against Mugabe's 43 percent, with Makoni taking eight percent.

"What this means is that we are looking at a re-run because he did not win with a margin of over 51 percent that would have given him the job straight away," one of the sources said.

A projection by the independent Zimbabwe Election Support Network (ZESN) had Tsvangirai taking 49.4 percent and Mugabe 41.8 percent with Makoni on 8.2.

The opposition is expected to unite behind one candidate if there is a runoff, which would be held three weeks after last Saturday's election.

A senior Western diplomat told Reuters a re-run was likely.

"We can all speculate about what they (ZANU-PF) did or did not do. But when you look at some of the projections by other observers, such as ZESN, they are pointing to a re-run," he said.

Electoral authorities said they were still collating and verifying returns.

"It is now clear that there is something fishy. The whole thing is suspicious and totally unacceptable," MDC spokesman Nelson Chamisa said.

Seven European countries and the United States called on Zimbabwe's Electoral Commission to quickly release the results.

British Prime Minister Gordon Brown on Tuesday called for their immediate publication, saying the democratic rights of Zimbabweans must be upheld.

"The eyes of the world ... will be upon Zimbabwe so that the doubts that people have and the questions people have can be answered," Brown said.