President Robert Mugabe fought to survive the biggest crisis of his rule on Wednesday after losing control of Zimbabwe's parliament for the first time since taking power after independence.

The opposition Movement for Democratic Change said Mugabe had also been defeated in a presidential election last Saturday and should concede defeat to avoid embarrassment. Mugabe's aides angrily dismissed the MDC claim, hinting the opposition could be punished for publishing its own tallies despite warnings this would be regarded as an attempted coup.

But the state-owned newspaper and projections by Mugabe's ruling ZANU-PF party conceded that he had failed to win a majority for the first time in 28 years.

Official results of the parliamentary election, which have trickled out slowly since last Saturday's election, showed that Mugabe's ruling ZANU-PF could not outvote the combined opposition seats. Official figures said the mainstream Movement for Democratic Change (MDC) had taken 105 seats, a breakaway faction 9 and an independent 1 in the 210-seat parliament.

Mugabe's ZANU-PF has so far taken 94.

Mugabe, 84, faced an unprecedented challenge in the elections after being widely blamed for the economic collapse of his once prosperous nation.

The mainstream MDC faction said its leader Morgan Tsvangirai had won 50.3 percent of the presidential vote and Mugabe 43.8 percent according to its own tallies of results posted outside polling stations.

No official results have emerged in the presidential vote.

But all the signs are that Mugabe, a liberation war hero still respected throughout Africa, is in the worst trouble of his rule.

MDC Secretary General Tendai Biti said Tsvangirai had an absolute majority, enough for outright victory, but he would accept a second round runoff against Mugabe "under protest".

Analysts said the president was likely to be humiliated in a runoff and the defeat in the parliamentary vote would remove some of his power of patronage -- a plank of his long and iron rule.

His government called the MDC claim "mischievous". Deputy Information Minister Bright Matonga told Sky television: "President Mugabe is going nowhere. We are not going to be pressurised into anything."

ARMY

Matonga said in a telephone interview with Sky: "No-one is panicking around President Mugabe. The army is very solidly behind our president, the police force as well."

Mugabe's spokesman, George Charamba, said the MDC was in contempt of the law by announcing results. "You are drifting in very dangerous territory and I hope the MDC is prepared for the consequences," he said.

Mugabe, known for his fierce and defiant rhetoric, has not been seen in public since voting, despite speculation he would make a television address on Tuesday night.

The government appears to have been preparing the population for a runoff by revealing its own projections showing a second round would be required in the statutory three weeks after last Saturday's vote. Both Tsvangirai and the government have dismissed widespread speculation that the MDC was negotiating with ZANU-PF for a managed exit for Mugabe, who has ruled uninterrupted since independence from Britain in 1980.

Analysts said Mugabe was unlikely to make a negotiated exit but go down fighting in the second round.

"He is not the type that quietly walks away into the sunset," a senior Western diplomat said in Harare.

The prospect of a runoff has raised fears both inside and outside Zimbabwe that the hiatus before a new vote would spark serious violence between security forces and militia loyal to Mugabe on one side and MDC supporters on the other.

The state-owned Herald newspaper also said the government had decided to immediately implement tax relief to cushion the effect of runaway inflation, officially over 100,000 percent but estimated to be much higher -- the world's highest rate.

The widening of workers' tax-free threshold tenfold to 300 million Zimbabwean dollars per month -- $10,000 at the government's official rate but about $7.50 on the black market -- is widely seen as an attempt to curry favour with voters and suggests ZANU-PF is preparing for a runoff.

The opposition and international observers said Mugabe rigged the last presidential election in 2002. But some analysts say the groundswell of discontent over the economy is too great for him to fix the result this time without risking major unrest.

Apart from surreal inflation and a virtually worthless currency, Zimbabweans are suffering food and fuel shortages and an HIV/AIDS epidemic that has contributed to a steep drop in life expectancy.

The opposition, including former Finance Minister Simba Makoni, who stood as a third candidate, is expected to unite behind Tsvangirai if there is a runoff.