http://online.wsj.com/article/SB10001424052748704654004575517720045294924.html

CARACAS, Venezuela—Venezuela's President Hugo Chávez suffered a political blow in congressional elections, losing the ability to pass new laws at will after opposition candidates banded together behind a unified plank of candidates.

Mr. Chávez still enjoys a congressional majority after candidates loyal to him won at least 96 of the 165 seats. But opposition candidates won at least 61 seats, enough to strip Mr. Chávez of his two-thirds majority—the threshold needed to pass sweeping legislation in the congress.

No official vote tally has been released. But the opposition says it also won 52% of the popular vote which, if verified, would provide momentum going into the 2012 presidential elections. "We are the majority," said Ramón Guillermo Aveledo, an opposition director.

Aristóbulo Istúriz, campaign chief for the socialist PSUV party, also declared the results a victory. "We went for two-thirds and weren't able to reach it," he said. "But we're the majority." There was little joy at the Socialist party headquarters, which shut its doors as the vote count dragged on into the early hours of the morning.

"A new cycle begins today," said Carlos Ocariz, the opposition mayor of Petare, a sprawling mostly slum district that was once a Chávez stronghold, but which elected an opposition deputy on Sunday. "Chávez's rollercoaster is going down."

The election is widely seen as a referendum on the president's 11-year rule. Before the election, the populist leader had predicted his United Socialist Party of Venezuela or PSUV would win a two-thirds majority. Mr. Chávez, 56 years old, named the electoral campaign "Operation Demolition" and had told his followers to "demolish" the political opposition.

"This will change the political dynamics of Venezuela," said Michael Shifter, president of the Washington-based think tank, the Inter-American Dialogue. "It's a respectable result which the opposition can build on for the 2012 presidential race. It shows they are back in the game and Chávez is vulnerable."

The results mask what is likely a much closer result in the popular vote, which analysts say appears to be about evenly split. Due to changes in electoral law approved by the Venezuela's electoral authority, which is dominated by Mr. Chávez, a deputy in a rural state such as Delta Amacuro, needs only 20,000 votes to get elected, while a deputy from heavily populated Zulia state needs 400,000 votes, said Ricardo Sanchez, a former student leader who was expected to win election as an opposition alternate delegate in Caracas on Sunday.

The electoral results set the stage for intense debate over Mr. Chávez's policies in and out of congress. Some analysts say Mr. Chávez may not relinquish his grip on the legislature easily. He might rule by decree, for example. A new congress won't be seated until January, meaning Mr. Chávez could push important legislative changes before then.

During his presidency, Mr. Chavez has weathered a massive strike, a brief coup and wide economic swings. Some top political analysts cautioned against over-estimating the opposition's ability to corral the self-styled socialist.

Mr. Chávez sent an electronic message to his followers after the results vowing not to back away from his populist program of nationalizations, price controls and government spending on welfare and social services.

"We've obtained a solid victory," Mr. Chávez wrote on his widely followed Twitter account. "Sufficient to continue deepening Bolivarian and Democratic Socialism."

Mr. Chávez hasn't sat idle in the past when opponents have won. Two years ago, when an opposition politician was elected mayor of Caracas, Mr. Chávez stripped the office of its power. That same year Mr. Ocariz won the mayoral election in Petare. Mr. Chávez stripped the district of 16 garbage pickup trucks the next day, he said.

Looking to the future, Mr. Aveledo urged the outgoing legislature not to act on vital matters without taking into account the makeup of the new legislature. "The voice of the people must be heard," he said.

Venezuela's opposition is beginning a long march to return to relevance. The opposition sat out congressional elections in 2005, saying they were rigged. That decision, most opposition leaders now agree, was disastrous. Congress became a rubber-stamp body enacting laws to increase Mr. Chávez's power. "Voting is the way to change things," said Mr. Aveledo.

Despite high oil prices, Mr. Chávez's popularity has been eroded by recession, a wave of violent crime and the hemisphere's highest inflation, running at 30% in the 12 months ended in August. Venezuelans have also suffered electricity blackouts and food shortages, amid a scandal in which thousands of tons of food purchased by the government rotted while awaiting distribution.

In Petare, the erstwhile Chávez bastion, now has many Chávez opponents. Palmira de Sa, 44, who runs a small clothing shop said she voted for the opposition. "Our children's future is at risk." Mariel Iglesias, 47, a high school teacher, said that she also voted against Mr. Chávez. "There's more insecurity, and we need jobs and housing," she said.

Nonetheless, the opposition's gains didn't come easy. Mr. Chávez has an approval rating of about 40%—more than any other Venezuelan politician. He has a devoted following in the countryside and among the country's many slum dwellers. Mr. Chávez used his unlimited television access to support his candidates. He also enjoyed unfettered use of state funds for the campaigns. Redrawn electoral districts tilted the playing field further toward candidates he supports.

For many Venezuelans, Mr. Chávez can do no wrong. Julio Agresott, a 46-year-old security guard in an upscale Caracas apartment complex, said he continues to support Mr. Chávez and voted Sunday for a candidate from the ruling party. While acknowledging the economy is suffering and crime is a problem, Mr. Agresott said his support for Mr. Chávez can be explained with one word: "respect."

"I used to be disrespected here, treated as if I wasn't an equal," said Mr. Agressott, an afro-Colombian by origin who moved to Venezuela 15 years ago seeking work. "Now, I feel like I can speak freely and that I count."

Write to Jose de Cordoba at jose.decordoba@wsj.com and Dan Molinski atDan.Molinski@dowjones.com