Exit polls have placed Greece's conservative New Democracy party slightly ahead of the anti-austerity party Syriza in crucial elections.
An updated poll has projected that New Democracy has 28.6%-30% of the vote, while Syriza is adjudged to have secured 27%-30%.
An uncertain result will do little to quell unease among European leaders fearful that an anti-austerity administration will lead the failing nation to crash out of the eurozone. It is also unlikely to appease jittery stock markets desperate for certainty when they open for trading.
Lord Mandelson warned Greece "faces a very long and a very painful road back" and called on European leaders to take swift action to tackle wider economic turmoil in the single currency. Former prime minister Tony Blair said the only way the euro was likely to survive, regardless of Greece's future within it, was for Germany to throw its financial weight behind the currency.
Earlier this week, Chancellor George Osborne warned Britain faces dire consequences if Greece leaves the eurozone without an "ambitious" plan to deal with the fallout.
Voters returned to the ballot boxes just six weeks after the last election, which left no party with enough votes to form a government. Parties potentially face a fresh round of coalition talks in the hope of forming an administration. Failure could mean a third round of elections later this year.
German chancellor Angela Merkel has warned Greece it cannot dodge austerity measures by renegotiating its bailout agreement. She said: "We will have to speak to any government. I can only warn everyone against leaving the currency union. The internal cohesion of the eurozone would be in danger."
Central banks, including the Bank of England, Bank of Japan and US Federal Reserve, are expected to launch emergency support measures to cushion the blow of an implosion in the eurozone.
A chaotic Greek exit from the single currency would fuel a run on the banks, with the population likely to want to avoid having its euros converted to drachma or savings frozen. The same could happen to banks in countries which have lent heavily to Greece, such as France, triggering a domino effect known as contagion, which could spread to banks in non-eurozone countries, including the UK.
Prime Minister David Cameron will fly out to Mexico for the G20 summit of leading nations where the ramifications of the result are expected to be top of the agenda. The German chancellor Angela Merkel, French president Francois Hollande and Italian premier Mario Monti are expected to delay their travel to Los Cabos until Monday to be in place to deal with the immediate aftermath of the results.