Auckland, Nov 26: The leader of New Zealand's Labour Party on Saturday conceded the election to the incumbent Prime Minister John Key, paving the way for his return for a second term as the nation's leader.

Speaking to his supporters in Auckland, opposition Labour Party leader Phil Goff conceded defeat to Key on Saturday.

“In a democracy, it's the people who decide who represents them in parliament and the people have made their decision and we treat their decision with humility and with respect. That's what democracy is about. But I want to say this: it wasn't our time this time,” Goff said.

A dominant performance by Key's National Party, however, appeared to be coming up just short of giving him enough votes to govern alone.

But Key will likely find enough support among minor parties to shore up his leadership.

With most of the vote counted on Saturday, the National Party was projected to win 60 seats in a parliament of 121 seats, an increase of two from the current parliament.

Key will look to the Act party, the Maori party and the United Future party - which are projected to get a total of five seats between them - as partners in forming a stable government.

The Labour Party had a disastrous night, winning just 27 percent of the vote with most votes counted.

That means the party will lose about nine of its 43 seats.

The Green Party won 11 percent of the vote, its best showing ever.