Facing his first electoral test since Georgia's 2008 war with Russia, Saakashvili's United National Movement was set to sweep the vote in 64 municipalities across the country and in the capital Tbilisi, according to initial results.

The election will give a boost to Saakashvili domestically but the mixed assessment by monitors is unlikely to aid his reputation in the West -- damaged by his handling of the war and opposition claims of growing authoritarianism.

"Yesterday's municipal elections in Georgia marked evident progress towards meeting international standards, but significant shortcomings remain to be addressed," the Organisation for Security and Cooperation in Europe (OSCE), the main international mission observing the vote, said in a statement.

The OSCE said the elections were organised "in a transparent, inclusive and professional manner".

But it noted "systemic irregularities" including several cases of ballot box stuffing and an "uneven playing field favouring contestants from the incumbent party."

With ballots counted in 51 percent of voting precincts across the country, the United National Movement was leading with 63 percent of the vote, followed by the Christian Democrats with 12 percent and the Alliance for Georgia with 11 percent, according to the Central Election Commission.

In Tbilisi, incumbent Gigi Ugulava, a key Saakashvili ally, was leading the mayoral race with 55 percent of the vote with 99 percent of precincts reporting.

Main opposition contender Irakli Alasania, a former ambassador to the United Nations, trailed with 19 percent.

With votes counted in 71 percent of precincts in the race for the Tbilisi city council, Saakashvili's party was also ahead with 52 percent of votes, followed by Alasania's Alliance for Georgia with 19 percent.

About 3.5 million people were registered to vote and voter turnout was 49 percent, the election commission said.

The election saw the first-ever direct vote for the powerful mayor's post in Tbilisi, a position seen as a potential springboard for the presidency after Saakashvili's second term ends in 2013.

Standing side-by-side with Ugulava after the vote, Saakashvili insisted the election had been a step forward for democratic reforms.

"The final result of the vote is that democracy has won," Saakashvili said in televised remarks Sunday.

Pre-election polls had forecast that Saakashvili's party would win the vote comfortably amid deep divisions in the opposition and continued support for his economic reforms.

Speaking to hundreds of supporters at party headquarters, Alasania said he would accept the results of the vote despite its problems.

"In spite of significant shortcomings during the pre-election period, the elections in Tbilisi took place and Tbilisians have made their choice. I value the free choice of all citizens including those who voted for our opponents," he said.

"We will continue our struggle for a democratic and fair Georgia," he added.

Opposition leaders had promised to call supporters to the streets if they considered the vote unfair, but analysts say they do not expect a repeat of large-scale demonstrations held against Saakashvili last year.

Saakashvili weathered months of protests calling for his resignation over his handling of the war, which saw Russian forces pour into Georgia to repel an assault on the Moscow-backed breakaway region of South Ossetia.

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