With nearly 100 per cent of the votes counted, Prime Minister Lars Loekke Rasmussen's Liberal Party showed a slight gain from four years ago. The populist Danish People's Party recorded a big drop in support, however, meaning Rasmussen would no longer gather a majority in the 179-seat Folketing (Parliament), AP reported.
The TV2 broadcaster reported that Rasmussen had already acknowledged his defeat in the general elections.
"We had a really good election, but there will be a change of government", Rasmussen told supporters at an election night rally, cited by local media.
According to media reports, Denmark could become the third Nordic country in a year, to elect a leftist government as local voters appear to have rebelled against austerity measures and dealt a blow to right-wing politicians.
Both the Socialist People's Party and the Social-Liberal Party have campaigned for more gentle immigration policies and greater efforts to combat climate change, echoing support for Europe's Greens at the European Union elections in May.
Greenland and the Faroe Islands, are parts of the Kingdom of Denmark with wide autonomy, each has two of parliament's 179 seats.