Pier Luigi Bersani won a run-off primary by a huge margin to become the Italian centre-left candidate for prime minister in national elections early next year.
Bersani has said repeatedly that in power he would stick to tough budget commitments made by technocrat Prime Minister Mario Monti, but seek to soften the impact on workers and the poor and put more emphasis on economic growth.
Markets have expressed some wariness over an alliance between Bersani, who is head of the centre-left Democratic Party and a former communist, and a party called Left, Ecology and Freedom.
''They won and we did not,'' Bersani's rival for the centre-left candidacy, fellow Democratic Party member Matteo Renzi, said at a rally in his native Florence, where he conceded defeat.
''Congratulations and we wish you well.''
With some 80 per cent of the 9,200 polling places reporting, Bersani had 60.8 per cent of votes to 39.1 per cent for Renzi. The results were in line with two exit polls.
Bersani, 61, will now stand in national elections, likely in March, against a still-to-be-chosen centre-right candidate to take over from Monti.
The contrast was strong between the bald, slow speaking professorial Bersani and Renzi, who bounced around platforms at rallies in open shirts and jeans.
Renzi had painted himself as a Kennedy-esque reformer, saying Italy's largest centre-left party needed a big shakeup.
He had accused the older generation of the Democratic Party of failing to present a credible alternative, allowing former Prime Minister Silvio Berlusconi's centre right to govern for so long.
Monti, favourite of the business community, has said he will not be a candidate next year but might come back if the election does not provide a clear winner.
Another possible future role for him is as president of the republic and guarantor that austerity reforms agreed with Italy's European partners continue.
Italy's gross public debt is equivalent to 126 percent of national output, according to the IMF.
Berlusconi's scandal-plagued right, forced from government by the financial crisis a year ago, is in disarray.
Berlusconi said on Monday he would wait to see who wins the centre-left primary before deciding whether to run himself. He has repeatedly changed his mind in the last few weeks on whether to do so.
Some analysts said the victory by Bersani might spur Berlusconi to get back into the game.
''Indeed, a Bersani-led PD is likely to embolden Silvio Berlusconi to form his own party in the hope of keeping the centre left out of power and reviving the fortunes of Italy's centre right,'' said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.