The Conservatives would have 305 MPs, up 95 on 2005, Labour would have 255, down 94, and the Lib Dems 61, down 1. Nationalists and others would have 29.
Downing Street sources have said Gordon Brown will try to form a coalition government - although initial results suggest he would struggle to do so.
A probe has been launched after some people could not vote due to queues.
With results starting to flow in, there have been big swings of more than 8% to the Conservatives in a number of seats in Labour's North-East of England heartland, although Labour has hung on to them. The first Conservatives gain has come in Kingswood on a 9% swing, suggesting a Conservative overall majority.
In other election night news:
* Northern Ireland's first minister and DUP leader Peter Robinson has been defeated in West Belfast by the Alliance party
* Lib Dem leader Nick Clegg went to apologise to voters in Sheffield as they were among those facing the prospect of being turned away from polling stations as long queues formed ahead of the 2200 BST voting deadline.
* UK Independence Party leader Nigel Farage will stay in hospital and miss his election count after being injured in a plane crash.
In some parts of the country there are reports of polling stations staying open for an extra half hour - and people even being turned away before they could cast their ballot.
BBC Political Editor Nick Robinson said there could be legal challenges from candidates who have fallen a few votes short of victory and the Electoral Commission have launched an investigation.
In Sheffield police were called to move people on when voters staged sit-in protests after waiting hours to vote. The city's returning officer apologised but said he had to close the polls at 2200 BST.
Although projections suggest he would have to get agreement from the Lib Dems and Welsh and Scottish nationalists, Downing Street sources have suggested Labour leader Gordon Brown will try to form a coalition government if there is a hung parliament.
He will argue that the sitting government has the first right to form an administration even if it is not the biggest party, the sources said.
Home Secretary Alan Johnson said striking a deal would be the "grown-up and mature" thing to do, adding that he did not think the Lib Dems could form a coalition with the Tories.
He said Labour had "a lot in common" with the Lib Dems - particularly on electoral reform.
Lib Dem foreign affairs spokesman Ed Davey refused to be drawn on whether his party would form an alliance, saying: "Nick Clegg has made very clear that we want to wait and see what the results are."
Exit poll
NOP and Mori surveyed 17,607 voters at 130 polling stations across the UK for the BBC/ ITV/Sky exit poll.
All exit polls have a small margin of error which could be significant in a tight election such as this one, in which the three main Westminster parties have been so close in the opinion polls. There could also be different voting patterns around the country.
Nevertheless, Conservative leader David Cameron might find that winning one or two seats in Northern Ireland and forming a deal with the Democratic Unionist Party might be enough to give him a majority, making him Britain's next prime minister.
The Conservatives gained 5% on their 2005 result in England, although their vote remained static in Scotland and Wales, the poll suggests.
The exit poll anticipates that the Labour Party has been more successful at holding on to its vote in seats in Scotland and Wales, gaining 2% on 2005, but its vote went down by 9% in England, the survey suggests.
The poll also anticipates the Lib Dems will perform better in England than in either Scotland or Wales, but a fall in his number of MPs would still come as a blow to Lib Dem leader Nick Clegg, who has been neck-and-neck in the polls with the other two main parties for much of the campaign.
Key marginals
It remains to be seen whether the poll proves to be accurate in its estimate of the Lib Dem performance - deputy leader Vince Cable told BBC News it was "very strange" and insisted such polls had been "horribly wrong" in the past.
He said his party expected to have gained a lot from postal votes, as they were ahead in some opinion polls when those votes were cast.
Exit poll results on ParliamentThe exit poll result was projected onto the tower which houses Big Ben
Shadow work and pensions secretary Theresa May told BBC News that if the exit poll was correct "it does show a clear rejection of Gordon Brown" and that "Labour would have lost their legitimacy to govern".
The vast majority of constituencies are conducting their counts overnight, with about 20 not due to begin the process until after 0900 GMT on Friday.
Most seats will declare in the early hours of Friday. A handful of key marginals, such as Birmingham Edgbaston and Battersea, were expected to declare shortly after midnight but have been delayed because of increased turnout and are now expected after 0100 BST.
More than 44 million people are registered to vote in 649 Parliamentary constituencies. Elections are also taking place for 164 English councils.
Polling in one constituency - Thirsk and Malton - has been delayed until 27 May because of the death of one of the candidates during the campaign. The exit poll assumes the Conservatives will win here.
Among the council elections taking place, voters will choose representatives in 32 London boroughs, 36 metropolitan authorities and 20 unitary authorities.
In these elections, a total of 15,785 candidates are contesting 4,222 seats.
Voting has also taken place to choose mayors in Hackney, Newham, Lewisham and Watford. you are here
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