This gives the centre-left 144 votes in the 349-seat parliament, while the Alliance have 142, meaning neither side has enough support to govern alone.
The center-right Moderate Party is set to take to take third place with 17.7 per cent.
Addressing supporters after more than four-fifths of ballots were counted, party leader Jimmie Akesson said the victory was in the number of seats the party gained in the national assembly, the Riksdagen.
Both the left-leaning bloc led by the Social Democrats and the centre-right bloc in which the Moderates is the largest of four parties have said they would refuse to consider the Sweden Democrats as a coalition partner.
"Sweden, birthplace of multiculturalism and model for the left, has finally chose to change after years of wild, uncontrolled immigration", Italian Deputy Premier and Interior Minister Matteo Salvini, leader of the far-right League, said in a statement Sunday night.
The bad outcome for Lofven's party prompted the leader of the centre-right alliance, conservative Ulf Kristersson, to call for Lofven's resignation.
"It is just so far beneath anything remotely resembling European election standards, or anything we would allow even in Eastern Europe", he said. Faced with growing support for the Sweden Democrats, the Social Democrats focused much of their campaign on issues such as immigration and crime, where the far-right controls the narrative. However, it may be apparent in other countries, too, albeit masked by voting systems that encourage two party systems. Some of their campaign promises include leaving the European Union and putting a freeze on immigration.
Lengthening queues for critical surgery, shortages of doctors and teachers and the failures of police to deal with inner-city gang violence have shaken faith in the "Swedish model", built on a promise of comprehensive welfare and social inclusion.
Mr Kristersson, in turn, has called on Prime Minister Stefan Lofven to step down as the country stares down the barrel of a hung parliament.
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That said, Apple didn't give an estimate of how much the proposed tariffs would contribute to the increased costs of its products. That list includes some consumer products, like cameras, luggage and tires and they'd be subject to tariffs of 10-25 percent.
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The WFMY News 2 Weather team predicts it may get uncomfortably close to the East Coast by the middle of next week. On the forecast track, Helene will pass very close to the southern Cabo Verde Islands tonight and early Sunday.
"It's. about decency, about a decent democracy".
At the party's rally on Saturday, Akesson strongly criticised Lofven's government for "prioritising" the cause of immigrants over the needs of citizens.
"We used to be very safe". "I think that it shows that people are disappointed with how the country is run, and they are rooting for something, they want something different, but it's not necessarily the best kind of different", he said of the far right's rise. The flower replaced a flamethrower as the party looked to soften its image. "They're more direct", Elias, an 18-year-old voting in his first election, told AFP.
However, the party's results did not meet expectations ratcheted up by exit polls predicting it would become Sweden's second-biggest party. It's more that we have had an integration issue for maybe 20 years. "We have to ask ourselves a question: why is it so hard for these people to get a job?"
Stefan Löfven said that he would not be resigning and instead urged for a cross-bloc cooperation.
The bloc has said they're eager to oust the Social Democratic Prime minister and take over from the left bloc, which would be simple if cooperation with SD is considered.
The composition of the next government may not be known for weeks.
The opposition is intent on ousting Lofven, with some Moderates willing to go so far as to put an end to Sweden Demorats' pariah status and open negotiations with them.
About 7.5 million registered voters were choosing from nearly 6,300 candidates for a four-year term in the 349-seat Riksdag, or parliament.