With votes from 70 percent of polling stations counted, Thaci's Democratic Party of Kosovo (PDK) held 30 percent, ahead of its arch rival in the Democratic League of Kosovo (LDK) with 26 percent.

Thaci is likely to form a coalition government with smaller parties and ethnic Serbs to secure his third four-year term in power, but his reliance on others could hamper his ability to govern effectively.

Turnout of only 43 percent, down from the two previous parliamentary elections, reflected widespread frustration among the Balkan country's 1.8 million people at the lack of progress made since Thaci presided over the territory's secession from Serbia in 2008.

"Tonight, Kosovo has won. From tomorrow we will start work on our new mission," Thaci told supporters in the capital, Pristina. "We will tell the world that Kosovo's independence was just the beginning, not the end."

Fifteen years since breaking away in war, Kosovo ranks among Europe's poorest countries. A third of the workforce is unemployed and corruption is rife.

Thaci was one of the leaders of the Kosovo Liberation Army that took up arms in the late 1990s to break free from the repressive rule of Serbia under strongman Slobodan Milosevic.

NATO intervened in 1999 with 78 days of air strikes against Serbia, trying to halt the massacre and mass expulsion of Kosovo Albanians by Serbian forces waging a counter-insurgency.

YOUNG JOBSEEKERS

Kosovo declared independence almost a decade later and has been recognised by more than 100 countries, but not Serbia or its big-power backer Russia, which is blocking the young state's accession to the United Nations.

Its economy is forecast to grow by at least 3 percent this year, driven by construction and cash sent home by Albanians working abroad. Even that, however, is not enough to absorb the thousands of jobseekers entering the workforce every year in what is Europe's youngest society.

Two months before the election Thaci's government raised public sector wages, pensions and social welfare benefits by 25 percent. That directly affects 240,000 teachers, doctors, police, pensioners and others, with more benefiting indirectly.

He has promised to do the same every year if given a new term. At 43 percent, turnout was down on the past two elections in 2007 and 2010, when 54 percent and 48 percent of eligible voters cast their ballots.

Haki Jashanica, a 56-year-old former teacher, said of Thaci's PDK: "If this party continues in the same vein, in terms of the economy and raising salaries, then it will be a pleasure to have them in power again."

But Valbona Bajraktari, a 37-year-old unemployed woman, said her expectations were not high. "The only thing I want is for them not to steal or to hire their aunts," she told Reuters.