"My dream of becoming prime minister has faded away," Rajapaksa told AFP. "I am conceding. We have lost a good fight."
Rajapaksa accepted that his United People's Freedom Alliance (UPFA) had lost even before Elections Chief Mahinda Deshapriya could announce the final results.
"We have won eight districts and the UNP (ruling United National Party) has 11 (out of a total of 22)," Rajapaksa said. "This means we have lost. It was a difficult fight."
Official figures showed the same breakdown of results, although final tallies had not yet been officially declared.
Three other districts in the country were dominated by a minority Tamil party which is friendlier towards the UNP.
No party appears to have secured an absolute majority of 113 seats in the 225-member parliament, which will force the new government to seek out smaller allies.
Election Commissioner Deshapriya said he expected the release of the final party positions by midday Tuesday, while individual votes garnered by candidates would be announced later.
When Rajapaksa cast his ballot on Monday, he expressed confidence that he could return to power as Sri Lanka's prime minister just months after he was toppled as president, but he admitted a loss early as he had in the presidential elections at the beginning of the year.
"There were some who criticised me then for conceding so early in the count, but I did it because it was the right thing to do," Rajapaksa said of the January polls. "This time too we have lost."
Referendum on Rajapaksa
Rajapaksa did secure a seat in the 225-member parliament by standing from the north-western district of Kurunegala after ditching his home constituency of Hambantota where three of his close family members contested.
He remains hugely popular among big sections of the majority Sinhalese community for presiding over the crushing defeat of Tamil guerrillas in 2009 after their 37-year war for a separate homeland.
He retained support in the Sinhalese heartland in the island's south, but lost out in urban areas.
His main rival, Prime Minister Ranil Wickremesinghe is expected to be sworn in again to form a new government shortly, officials said.
Speaking after he voted in Colombo, Wickremesinghe told reporters that he was confident of forming a new government that could "consolidate the January 8 revolution," a reference to Maithripala Sirisena's victory that he supported earlier this year.
Wickremesinghe described Monday's vote as a referendum on whether the 15.04 million electorate wanted Rajapaksa to return to politics after a decade in power.
The election commissioner Deshapriya said the vote, called a year ahead of schedule by President Sirisena who ousted the veteran leader in January, had been one of the most peaceful in Sri Lanka's history.
Since his surprise victory over his former mentor, Sirisena has struggled to impose his authority over his United people's Freedom Alliance (UPFA) party and was powerless to prevent Rajapaksa from standing as one of its candidates.
He threatened to invoke his executive powers to prevent his combative predecessor from becoming prime minister, but Rajapaksa was banking on a strong showing to force Sirisena to back down.
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