Prime Minister Ferenc Gyurcsany's socialists won 43.3% of the vote on Sunday while their coalition partners, the liberal Free Democrats, collected 6.3%, according to results published by the National Electoral Commission, with 96% of votes counted.
The main conservative opposition Fidesz party of former prime minister Viktor Orban won 42.2%.
A run-off on April 23 will decide the final outcome as candidates in 174 of 386 parliamentary mandates who failed to win a majority in round one, try again.
No governing party has won re-election in Hungary since the transition from communism to democracy in 1989 and this is the first general election since Hungary joined the European Union in 2004.
"Hungary did something it has never done since transition, it said the governing coalition can continue to govern," a beaming Gyurcsany told cheering supporters at the Socialist campaign headquarters in Budapest.
"Any way I look at the numbers, I see that MSZP (the Socialists) won the first round of elections," he said.
Opposition still alive
But the elections are not over.
The small conservative Hungarian Democratic Forum (MDF) party appeared to just scrape past the 5% bar necessary to remain in parliament, with exactly 5%, and became a potential lifeline for Fidesz, which is seeking to return to power after four years in opposition.
Fidesz supporters happy the
opposition is still in with a chance
Ibolya David, the MDF president, has refused to say if her party would form an alliance with any other party, but Fidesz has already expressed interest in striking a deal.
"The [government] coalition won the first round but they did not win the elections," said political analyst Gabor Torok.
"The MDF is now an uncertain factor," he said.