John Key has said the country has "voted for change" after his National Party won the election tonight.
He described the Labour term in government as "nine long years" and said: "New Zealand has so much more potential."
Key spoke at National Party headquarters after Helen Clark said she will stand down as Labour Party leader.
National won 45.5 per cent of the vote to Labour's 33.8 per cent, giving
National 59 seats.
It will form a coalition of 65 MPs with Act's 5 seats and Peter Dunne from United Future.
Key said New Zealand had spoken.
"Let me start by thanking every New Zealander who has cast their vote for National. Thank you for your support and thank you for your trust."
He said some people had stuck with National for "nine long years".
"Tonight your patience has been rewarded."
Others had not voted for National.
"Let me say this: whether you voted for National or not, tonight you have my pledge - I will lead a government that serves the interests of every New Zealander and it will be a government that values individuals' achievement and it will be a government that supports those that cannot support themselves and it will be a government we can all be part of."
Mr Key paid tribute to Helen Clark.
While the opposing leaders shared different views "we share a love for this country".
"I've always admired her dedication to the job, her ferocious work ethic and her desire to make New Zealand a better country."
He confirmed the next government would involve National, Act and United Future and said he would hold dialogue with the Maori Party.
"This is not as good as it gets. Yes we face challenges, but we will rise to them."
Helen Clark won her Mt Albert seat with 17,286 votes with a majority of 8,591. Her closest opponent, National's Ravi Musuku, won 8,591.
Clark
Clark said at Labour Party HQ tonight: "Tonight is a night for the winners to savour but we won't be going away."
She warned against what Labour had achieved "going up in the flames of right wing of politics" before revealing she would stand down.
"My job as Labour leader is done."
She said the new leader, who she expected would be appointed before Christmas, would have her full loyalty and support.
Helen Clark made the announcement after telling the Labour party faithful that she accepted the responsibility for the Labour loss.
She congratulated John Key on his victory.
"So with that, it's over and out from me. Thank you once again and thank you New Zealand for the privilege of being prime minister for the last nine years."
Hide
Rodney Hide told his Act supporters at Orakei RSA that Key had just rung to congratulate him. Hide said Key told him they would meet on Monday to discuss the formation of a new government.
Former National prime minister Jenny Shipley described the results as a thrashing.
"I think John Key is going to make a fine prime minister. I'm thrilled," she said.
Several high profile Labour MPs have lost their seats. Judith Tizard has been tipped out of the Auckland Central seat she has held since 1996 by National's Nikki Kaye, a 28-year-old businesswoman and relative newcomer to politics.
The historic West-Coast-Tasman has fallen to National's Chris Auchinvole with Damien O'Connor the casualty.
Harry Duynhoven has lost his New Plymouth seat in a substantial swing to National and Jonathan Young.
Mr Duynhoven, the Minister for Transport Safety and Associate Minister of Energy, is not on the Labour list, so will be out of Parliament.
Labour has also lost the most marginal seat in New Zealand. Otaki, held by Labour by just 382 votes, has fallen to National's Nathan Guy who claimed the seat over Darren Hughes. Up and comer Hughes, though, may get back into Parliament on his high list position for Labour.
Meanwhile, Winston Peters, one of New Zealand's most flamboyant politicians, has lost his place in Parliament, for the first time in more than 30 years.
Conceding defeat, he congratulated National's Simon Bridges and said it was all about democracy.
However, he told supporters and reporters that "this is not the end.".
Progressive Leader Jim Anderton has congratulated Key on his victory and wished him well, but he is promising to keep a close eye on the incoming right wing government from opposition.
"I'm going to enjoy the next three years in a way. I'm a good guerilla fighter and there's a lot to fight for I can tell you."
Act had a strong showing with 3.7 per cent of the vote.
New Zealand's incoming government will delay the implementation of the country's emissions trading scheme (ETS) pending a full inquiry into climate change.

The decision was revealed in the National Party's confidence and supply agreement with the ACT Party.  The agreement commits National to a review of climate change policy by a special select committee of Parliament.
Prime Minister of New Zealand.
The review will include the emissions trading scheme and possible alternatives to it, as well as "hearing competing views on the scientific aspects of climate change" and considering whether responding to climate change is economically worthwhile. Implementation of the ETS would be delayed until the review is complete — a process expected to take at least a year.

The ETS requires companies emitting greenhouse gases to cover their emissions with permits.  The legislation was passed on September 10, 2008, and provides for a phased implementation, with forestry entering the scheme immediately, industrial and energy sector emissions entering in 2010, and transport fuels in 2011.

The National Party won a victory over the Labour Party in last week's elections, and has formed a new government cabinet, led by prime minister-elect John Key.