Opposition candidate Ivo Josipovic has won Croatia's presidential elections, upsetting the capital's popular mayor.

Josipovic, who heads the Social Democrat party won 60.29 per cent of the vote compared with 39.71 per cent for Milan Bandic, the mayor of Zagreb, with 99.6 per cent of the vote counted, the state-run electoral commission said on Monday.

Comparing his election to a "victorious symphony," Josipovic said "every citizen who aims for a better, more just Croatia has won".

Bandic congratulated Josipovic and said he was going back to work at the city council on Monday.

While the presidential role is somewhat limited in Croatia, the vote was seen as a test on whether Croatia would maintain its pro-Western course and fight against corruption.

The cabinet and parliament are the key decision-makers but the president is the supreme army commander, co-creator of foreign policy and hires and fires chiefs of intelligence services.

At least 4.4 million Croats were eligible to vote in the presidential run-off that saw two contrasting styles of leadership on offer in the nation that is looking to join the EU in 2012.

EU hopes

Josipovic is expected to support the government's push to join the EU and has promised to back the drive by Jadranka Kosor, the prime minister, to implement reforms and fight corruption, as required by Brussels to complete EU accession talks this year.

But his win also gives a boost to his opposition Social Democrats party and sets up a possible showdown with the government over how to battle corruption and revive the economy.

Analysts say the government's biggest challenge is to salvage the strained budget, particularly as its economic forecasts of growth this year are seen as too optimistic.

Josipovic will succeed veteran reformer Stjepan Mesic, whose second five-year term ends in February.