Georgian billionaire Bidzina Ivanishvili’s party, Georgian Dream, is leading the Georgian parliamentary elections with 53.19 percent, after about one quarter of the votes have been counted, the country’s Central Election Commission said around midday on Tuesday.
President Mikheil Saakashvili’s United National Movement, meanwhile, has so far secured 41.51 percent of the vote.
Earlier, with just 9.9 percent of votes counted, Georgian Dream had won 57.13 percent and Saakashvili's party 38.14 percent.
The results broadly follow exit polls on Monday which suggested Georgian Dream had won, prompting the opposition to claim victory.
"We have won! The Georgian people have won!" Ivanishvili said in a speech broadcast on an opposition TV channel.
But with the count still proceeding the opposition's celebrations could prove premature.
President Mikheil Saakashvili, who leads the ruling United National Movement (UNM), admitted on state television that Georgian Dream was ahead in the vote in Tbilisi, but said his coalition was winning convincingly in the regions.
"But this does not mean we will split the country between Tbilisi and the regions," Saakashvili said. "We are all citizens of Georgia and we must stand side-by-side."
The atmosphere among the growing crowd on Tbilisi's Freedom Square was euphoric, with chants of "Georgia." Policing was virtually non-existent, although a drone hovered above the crowd.
But the run up to Monday's vote was fraught with tension and fears of violence. And early on Tuesday, opposition media claimed special forces officers had forcibly removed ballots from a number of polling stations in central Georgia's Khashursky district.
The Maestro TV channel said officers had "used tear gas and fired rubber bullets" at one polling station as they removed a ballot box in order to "rewrite" the results. The channel showed a crowd of opposition supporters heading toward polling stations in the district.
The reports were later confirmed by Transparency International Georgia, an NGO that monitors political corruption.
"There will be trouble if Saakashvili tries to steal the vote," warned Levan Chochua, a middle-aged Georgian Dream supporter on Freedom Square.
"Saakashvili says we are for Russia, but we are just for a normal life. He has built a façade of European democracy in the center of Tbilisi, but most people never see all this" Levan added, gesturing at the impressive buildings that ring the square.
These elections have seen Saakashvili face his most serious political threat since coming to power in 2003 as the result of a revolt against a regime led by former Soviet foreign minister Eduard Shevardnadze.
The polls have taken on particular importance in the light of a law passed in 2010 that transfers the majority of the president's executive powers to the prime minister. The law comes into force from 2013 when Saakashvili's second term ends. Whoever wins Monday's polls will be able to appoint the prime minister.
Saakashvili's UNM enjoyed a healthy lead in opinion polls until last month, when opposition channels aired explicit footage of male inmates at a Tbilisi jail being sexually assaulted with broom handles. The videos triggered large protests across Georgia and widespread anger at Saakashvili and the UNM and saw a reported groundswell of support for the opposition.
U.S.-educated lawyer Saakashvili, 44, has attempted to portray Monday's elections as a choice between continued "modernization" and a return to what he dubbed the "dark days" of the 1990s, when the former Soviet republic lay within Moscow's sphere of influence.
Ivanishvili, 56, and his supporters accuse Saakashvili of running a dictatorship and say his policies have brought Georgia - a country of 4.5 million that is an important transit route for oil and gas to the West - to the brink of disaster, not least by leading it into a ruinous 2008 war with its vast neighbor, Russia.
And while staunch U.S.-ally Georgia has earned plaudits from the World Bank for its far-reaching business reforms, the opposition says it has done nothing to alleviate poverty, and that the true number of unemployed is far above the official figure, which hovers around 15 percent.
But critics say Georgian Dream is little more than a rag-tag alliance of parties with very little in common and that Ivanishvili will be hard-pressed to suppress the more nationalist and xenophobic elements of his coalition should it come to power.
Saakashvili has also painted his ultra-wealthy rival, who made much of his money in Russia in the 1990s, as a Kremlin stooge seeking to "return Georgia to Russia's imperial space."
Ivanishvili has dismissed these allegations as "laughable." Like the UNM, Georgian Dream also states NATO and EU membership among its priority policies, although the coalition also pledges to improve relations with Russia.
NATO's Secretary General Anders Fogh Rasmussen on Monday said the elections are a "litmus test" of Georgia's democratic credentials.
U.S. and European officials called for transparent and peaceful elections, and over 400 poll observers from the Organization for Security and Cooperation in Europe (OSCE) are in the country. But monitors warned last week that the build-up to the crucial polls were "confrontational and rough."
"These elections are the first serious test of Georgia's capacity to hold a democratic election process which can lead to a peaceful transition of power at the ballot box," Thomas De Waal, a Caucasus expert at the Carnegie Endowment for International Peace in Washington, told RIA Novosti.
"If the country can manage to absorb a two-party system without open confrontation it will be a big step forward," he added.
The head of Georgia's influential Orthodox Church, Patriarch Ilya II, also urged honest elections, and carried out a pre-election blessing of Tbilisi last week.
From Penguins to Politics
Ivanishvili backed Saakashvili in the aftermath of Georgia's 2003 Rose Revolution, even funding, he says, the new president's inauguration. And for years the businessman showed little interest in being directly involved in politics, preferring instead to finance charity projects and breed penguins at his mansion in western Georgia.
But the enigmatic tycoon dropped a bombshell into Georgian politics last October when he announced that he would use some of his vast fortune of $6.4 billion - equivalent to around half the country's GDP - to create an alternative to the UNM, which has been in power for the past eight years.
The authorities responded by stripping him of his Georgian passport in 2011 after revelations that he is also a French citizen. Ivanishvili has said he will take advantage of a law allowing EU nationals who have lived in Georgia for more than five years to hold public office to become prime minister if his opposition coalition triumphs at Monday's polls. He says he will leave office after "one or two years" if his bid for power is successful.
Ivanishvili refused to vote at Monday's polls in protest at what he said was the authorities' "distortion" of the constitution, and said the law on EU nationals had been approved especially for him to rescue Georgia's international image.
Ties With Russia
Georgia has had no diplomatic relations with Russia since 2008, when it fought and lost a five-day war with its powerful neighbor over the breakaway republic of South Ossetia. Russia subsequently recognized the sovereignty of South Ossetia and another breakaway republic, Abkhazia. But a mere handful of countries have so far followed suit.
While Russia has not backed either side at the polls, there is great personal antipathy between Saakashvili and Russian President Vladimir Putin, who said in the aftermath of the South Ossetia conflict that he would like to "hang him [Saakashvili] by the balls."
And European Union military monitors said last week that Russian troops had been building up at the administrative border with South Ossetia and that a Russian helicopter had briefly landed on Georgian-controlled territory. Moscow said the helicopter had touched down in Georgia "by mistake."
A major military exercise carried out last month by Russia in its North Caucasus region also unsettled Tbilisi, although Moscow says the drills had been planned well before the announcement of the October 1 elections.