NZ's Prime Minister Helen Clark has suffered a resounding defeat in the country's general election.

After a record nine years in power Ms Clark today conceded defeat to her rival John Key, the rookie leader of the centre right National party who will become the country's least experienced Prime Minister in 100 years.

Standing down as Prime Minister and as leader of the Labour party, Mrs Clark said she was proud to have led Labour into government at the last three elections. She congratulated John Key and National but warned him Labour would not be going away.

"I accept the choice the people have made and accept responsibility," she told party faithful, adding, to the surprise of many, that she would stand down after 15 years as leader of Labour.

The National party had been widely predicted to win, with Mr Key consistently leading his rival in the polls by up to 12%.

With more than 98 percent of the vote counted, National had 45 percent of the vote, giving it 59 seats in the parliament of around 122 seats. National's ally, the ACT party, was forecast to win five seats, which ensured a majority.

The Labour Party had 34 percent of the vote, giving it 43 seats and its allies the Green Party had six percent of the vote, or eight seats.

A record 3 million voters turned out in spring sunshine to oust the formidable woman who has led them for nearly a decade.

In her place they will get a former merchant banker who has been a politician for just six years, after being head hunted by the National party to contest the Auckland seat of Helensville in 1992.

Although even her opponents concede Ms Clark has scarcely put a foot wrong in her years at the top the mood in the country was for change. John Key - young, personable, and with a rags to riches story that has struck a chord across the social spectrum, turned out to be the right face at the right time.

The 47-year-old son of an Austrian Jewish immigrant, who became a multi-millionnaire in London and on Wall St, he has brought the same breath of fresh air to NZ politics that Tony Blair brought to the UK in 1997 and, more recently David Cameron brought to the Tory party.

More liberal in his view than his predecessor Don Brash, he has dragged his party closer to the centre and kept most of his policies close to those of Labour gambling, rightly, that the country did not really want a change of direction, it just wanted a new face at the top.

Ms Clark, on the other hand, struggled to win an electorate tired of the same government. Political analysts say the anti-smacking legislation brought in by her government was the final nail in her coffin. Concerns that this still fiercely macho country was turning into a nanny state was enough for even loyal Labour voters to look elsewhere for a leader.

While Mr Key had been widely expected to win, under the country's mixed member proportional voting system (MMP), where the main parties depend on smaller parties to form a government, political analysts had predicted that even if National won on votes, Labour could still pull together enough seats with its coalition parties to get into power.

As recently as yesterday, with polls too close to call, the Maori party emerged as a probably king maker, wielding the balance of power. In the event, however, the Maori party managed to pick up only one more seat.

Mr Key inherits not just the nightmare of the global economic meltdown but, at home, deepening recession, rising crime and unemployment. Although he insists that his experience as an investment banker has made him the ideal candidate to lead NZ through economic turmoil his inexperience may act against him.

"He has to make some hard choices," said Chris Trotter, editor of NZ's Political Review Magazine. "He's going to have a very tough time."

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