Both sides claimed the results released Monday as a victory, but Chavez lost the two-thirds majority that has allowed his allies to ignore opponents in rewriting fundamental laws, appointing key officials such as Supreme Court justices and letting Chavez pass laws by decree.
Opposition leaders said they intend to start imposing some checks on Chavez in the National Assembly, and hope the president is receptive to dialogue.
Potentially just as significant in the long run were opposition claims they actually got more votes than Chavez-backed candidates did in Sunday's election and were deprived of a majority only because the system of congressional districts was stacked in Chavez's favor.
The opposition's strong showing could pose a challenge for the president's hopes of winning re-election in 2012 — a contest based on the popular vote.
Suspicions that the popular vote ran against the president were fed by the fact that a day after the election, electoral officials still had not released total counts.
While his opponents celebrated the results, Chavez dismissed their claims of victory.
"Keep beating me like that," Chavez said with a laugh at a news conference. "The revolutionary forces obtained a very important victory." With the vast majority of votes counted, electoral officials said Chavez's socialist party won 98 of the 165 seats in the National Assembly, while the opposition coalition won 65 seats. The remaining 2 seats went to a splinter left-leaning party.
Chavez's party had dominated the outgoing legislature because rivals boycotted the past election in 2005. The only opposition came from about a dozen congressmen who broke away from the Chavez bloc.
Ramon Guillermo Aveledo, leader of the opposition coalition, said its own tally showed anti-Chavez candidates garnered about 52 percent of the total popular vote.
Opposition parties complain that recent electoral changes drawn up by the Chavista-controlled National Assembly gave heavier representation to rural areas where the president is most popular.
The opposition also expressed suspicion about the fact initial results were delayed seven hours even though Venezuela has an automated ballot system. Electoral officials cited close races as having caused the delays in declaring winners.
While the opposition fell short of its hopes of a congressional majority, newly elected lawmakers promised to bring a plurality of voices to the legislature to examine Chavez's policies as he campaigns to transform Venezuela into a socialist state.
Maria Corina Machado, one of the anti-Chavez candidates who will take office early next year, told The Associated Press it is important to exercise "control on the president so that he becomes the president of all Venezuelans." Machado, who used to lead the vote monitoring group Sumate, said priorities will include insisting on the separation of powers for independent branches of government, decentralizing power and fighting corruption.
In Venezuela's unicameral legislature, a simple majority can approve many laws. But a two-thirds majority is needed to pass or change laws dealing with some areas, including laws relating to fundamental personal rights and freedoms or to the structure of government.
A three-fifths vote is required to grant the president decree powers, as the outgoing National Assembly did during part of its five-year tenure.
Opposition leaders celebrated at the coalition's headquarters in Caracas, where they hugged and kissed.
Meanwhile, early street celebrations by Chavez supporters grew muted when the results were announced about 2 a.m.
Monday. Some backers showed disappointment by holding their heads in their hands while others thrust their fists in the air, declaring a triumph.
Some analysts expressed doubt, however, that Chavez or his allies would actually cross the deep political divide to consult with rivals after long ignoring and vilifying them as stooges of the US government.
"It remains to be seen if President Chavez will respect that result in terms of not changing the rules of the game," said Moises Naim, former Venezuelan trade minister, told the AP during a visit to Singapore.
"We don't know if these elections will force Chavez to start behaving in a more democratic way and respecting checks and balances, or if he will interpret this as a need to clamp down on any remaining checks and balances and concentrate power even more," he said.
Naim noted that Chavez in the past changed laws to take away power from opponents who won elections.
After an opposition candidate won the mayoral election in Caracas in 2008, the Chavez-controlled National Assembly stripped the elected mayor, Antonio Ledezma, of most of his budget and subordinated him to another official in a newly created position appointed by Chavez. Opposition governors say Chavez has used similar tactics against them.
Naim suggested Chavez might look for ways to bypass the National Assembly. "He has never treated the opposition as a political rival but rather a mortal enemy," Naim said.
Miguel Tinker Salas, a professor at Pomona College in Claremont, California, said the outcome could prompt Chavez to concentrate on resolving domestic problems.
"It might force him to be more pragmatic and increasingly more focused on internal matters, especially now that he's got his eye looking toward 2012," when he faces re-election, Tinker Salas said.
Still, the opposition lacks a strong presence in many rural states where Chavez remains most popular, making it more difficult for government foes to win strong backing for a presidential candidate within two years, Tinker Salas said.
Polls suggest Chavez remains the most popular politician in Venezuela, even if his popularity has slipped due to disenchantment over crime and an economy that has Latin America's slowest growth and highest inflation.
The opposition, a coalition of multiple parties, smoothed over past divisions and fielded a unified slate of candidates for the elections. It remains unclear which opposition leader, or leaders, could emerge as top presidential contenders in the 2012 vote.
Governments from Spain to Colombia offered congratulations for the largely peaceful vote and a high turnout of 66 percent.
While some leaders expressed hope the result would facilitate greater dialogue, Chavez's close ally and mentor Fidel Castro wrote in a column that it was a "victory for the Bolivarian Revolution." In Washington, US State Department spokesman Charles Luoma-Overstreet said, "All Venezuelans can now deepen their dialogue and demonstrate their respect for the diversity of views that is essential in a democracy."
