Georgia's billionaire-led coalition was leading President Mikheil Saakashvili's ruling party in parliamentary elections Monday according to exit polls, but it was unclear which will win the final majority.

Two separate exit polls for Georgian television gave preliminary figures putting tycoon Bidzina Ivanishvili's Georgian Dream coalition ahead in the proportional-vote section of the contest by five or 10 percent.

Ivanishvili confidently declared victory but the final vote percentages may not necessarily be reflected in parliamentary seats because almost half of mandates are decided on a first-past-the-post rather than a proportional representation system that provided the basis for the exit polls.

The showdown between Saakashvili's ruling United National Movement and the Georgian Dream coalition led by Ivanishvili has turned increasingly bitter after a prison torture scandal prompted nationwide protests.

A preliminary exit poll for the pro-government Rustavi-2 and Imedi channels gave Ivanishvili's Georgian Dream a lead over Saakashvili's United National Movement party by 51 to 41 percent.

The exit poll for state television said Ivanishvili's coalition had won 35 percent of the vote, ahead of Saakashvili's ruling party with 30 percent. Differences in methodology may explain the contrasting figures.

"We have won! The Georgian people have won!" Ivanishvili said in a speech televised by opposition channel TV9.

But the ruling party has said that because of Georgia's complex voting system, the opposition may not win a final majority in parliament.

"We need to wait for results, but it seems clear that the Georgian Dream coalition has won the majority in the proportional vote but in single-mandate constituencies, the majority of votes has been secured by Georgia's (ruling) United National Movement," Saakashvili said in televised comments.

Thousands of opposition supporters gathered in Tbilisi's Freedom Square and celebrated as the exit polls were announced.

Before the torture scandal, which followed revelations of the torture and rape of prison inmates, most opinion polls gave the ruling party a significant lead, but the outrage seriously damaged its campaign.

Ivanishvili, who made a fortune through privatisation deals in Russia, has threatened to call mass demonstrations should Western observers fail to declare the vote fair.

In a hugely controversial move that troubled the West, Ivanishvili was stripped of his Georgian citizenship after announcing last year that he would challenge Saakashvili, and is currently a French citizen.

He symbolically did not vote on Monday despite constitutional amendments earlier this year that allowed him to do so.
 
The highly-polarised campaign in the country of 4.5 million people, described by international OSCE election monitors as "confrontational and rough", has raised fears of post-poll unrest.

Georgia's main backers, the United States and European Union, have called for a fair vote and emphasised that democratic progress was crucial for the Caucasus state's ambitions to join Western institutions such as NATO.

The polls are a "litmus test of the way democracy works in Georgia", NATO Secretary-General Anders Fogh Rasmussen said Monday.

Saakashvili's party has dominated Georgia since the charismatic lawyer rose to power after the 2003 "Rose Revolution" that ousted the country's former leader, the wily ex-Soviet foreign minister Eduard Shevardnadze.

The president's party controls 119 of the 150 seats in the outgoing parliament. Saakashvili has promised the "most free, most transparent" election since Georgia became independent in 1991.

The elections are crucial for Georgia's future because its parliament and prime minister will become stronger and the presidency's powers will dwindle under constitutional changes that come into force after Saakashvili's two-term rule ends in 2013.

Turnout was 53 percent at 1300 GMT, three hours before polls closed, the Central Election Commission said.

The US ambassador to Tbilisi, Richard Norland, said the contest was "genuinely competitive".

Since post-Soviet independence, Georgia has gone through economic collapse, civil war and repeated outbreaks of political unrest that have seen two presidents deposed, as well as a five-day war with arch-foe Russia in 2008.

The first official results are awaited in the early hours of Tuesday.