It means Theresa May faces the humiliation of ending with fewer seats than when she called the election.
The Tories are projected to get 316 seats, Labour 265 and the SNP 34.
Labour leader Jeremy Corbyn called on Mrs May to resign - but she said the country needed stability and her party would "ensure" it was maintained.
Labour looks set to make 33 gains with the Tories losing 15 seats - and the SNP down by 22 seats in a bad night for Nicola Sturgeon, with her party losing seats to the Tories, Labour and Lib Dems.
The Conservatives are forecast to win 44% of the vote, Labour 41%, the Lib Dems 8%, UKIP 2% and the Greens 2%.
Mr Corbyn, speaking after being re-elected in Islington North, said it was time for Mrs May to "make way" for a government that would be "truly representative of the people of this country".
He said he was "very proud" of the results so far, which he said were a "vote for hope for the future" and said people were "turning their backs on austerity".