Austria's Social Democrats scored a surprise victory over the ruling conservatives in a national election on Sunday that also brought a surge of rightist parties opposed to immigration.

Social Democrat leader Alfred Gusenbauer, 46, the son of a construction worker and a cleaning woman, looks likely to become the country's next chancellor at the head of a grand coalition -- pairing his party with the conservative Austrian People's Party (ÖVP) -- similar to that in neighboring Germany. He would oust conservative Chancellor Wolfgang Schüssel.

The outcome suggested Schüssel's campaign emphasis on continuing business-friendly tax cuts and playing up his image as a steady pair of hands stumbled on discontent over widening income gaps. The far right made gains on widespread concern over Muslim immigration.

"People in Austria believe that we are a rich and wealthy country, but not everything is distributed evenly," Social Democrat leader Alfred Gusenbauer said on Austrian state TV ORF. "And therefore people want a correction."

A grand coalition, the combination which ruled Austria for 34 of 61 years after World War Two, would likely mark the end of Schüssel's career in domestic politics, said Anton Pelinka, professor for political science, according to the Reuters news agency. "I can't imagine he would become vice chancellor," Pelinka said. "He's the real loser of the election."

The Social Democrats got 35.7 percent according to preliminary results, almost 1 percent down from the last election in 2002. But Schüssel's People's Party fell to 34.2 percent from 42.3 percent four years ago. A strong showing of the far-right prevented a center-left majority with the Green party, which scored 10.3 percent.

The far-right Freedom Party, which called for expelling mainly Muslim foreigners it brands as welfare cheats, bogus asylum seekers or criminals, finished third with 11.2 percent. In another surprise result, Jörg Haider's anti-immigration Alliance for Austria's Future, Schüssel's junior coalition partner, appeared to scrape into parliament with 4.2 percent despite its split from Freedom last year. In Austria, parties need to get at least 4 percent of the vote to be represented in parliament.

The combined rightist vote marked a 50 percent jump on the original Freedom Party's 10 percent showing in 2002. Arithmetically, the two of them and the People's Party would have a majority too, but Schüssel ruled out such a deal.

Schüssel conceded defeat on Sunday night. He has been Chancellor since 2000, governing first in a coalition with the Freedom Party and since 2005 with the Alliance for Austria's future.

The election outcome was a surprise after polls had suggested Schüssel would win, partly because the Social Democrats were weakened by a scandal involving the trade unions-owned Bawag Bank which had hidden billions of euros in financial losses resulting from speculative business transactions. The Social Democrats are traditional allies of the trade unions.

Analysts said Schüssel's conservatives had been unable to mobilize their supporters with his pledge to keep up his pro-market policies. During the campaign Schüssel had pointed to the balanced budget and low unemployment rate of less than 5 percent. But Gusenbauer had accused the conservatives of modernizing Austria at the expense of the less well-off.

The two far-right parties had resorted to vigorous anti-immigrant rhetoric during the campaign, with the head of the Alliance for Austria's Future demanding that 300,000 foreigners be deported. Justice Minister Karin Gastinger left the Alliance shortly before the election because of the party's "xenophobia."

Gusenbauer's 2006 campaign was headlined "New Fairness" and accused Schüssel's government of having handed tax breaks only to the rich and to big corporations while presiding over a rise in unemployment and pension cuts. Opinion polls prior to the vote, however, showed him lagging behind Schüssel by three points.