Brazilian president-elect Luiz Inacio Lula da Silva called for "peace and unity" after narrowly winning a divisive runoff election on Sunday, capping a remarkable political comeback by defeating far-right incumbent Jair Bolsonaro – who has yet to accept defeat.

The victory marks a stunning turnaround for charismatic but tarnished leftist icon Lula, who left office in 2010 as the most popular president in Brazilian history, fell into disgrace when he was imprisoned for 18 months on controversial, since-quashed corruption charges, and now returns for an unprecedented third term at age 77.

All eyes will now be on how Bolsonaro and his supporters react to the result, after months of alleging – without evidence – that Brazil's electronic voting system is plagued by fraud and that the courts, media and other institutions had conspired against his far-right movement.

"This country needs peace and unity," Lula said to loud cheers in a victory speech in Sao Paulo.

"The challenge is immense," he said of the job ahead of him, citing a hunger crisis, the economy, bitter political division, and deforestation in the Amazon.

He later addressed a tightly packed crowd of hundreds of thousands of supporters who flooded the city center clad in Workers' Party red, vowing: "democracy is back."

Bolsonaro, 67, was silent in the hours after the result was declared.

"Anywhere in the world, the losing president would already have called to admit defeat. He hasn't called yet, I don't know if he will call and concede," Lula told the massive crowd.

Some Bolsonaro supporters, gathered in the capital Brasilia, refused to accept the results.

"The Brazilian people aren't going to swallow a faked election and hand our nation over to a thief," said 50-year-old teacher Ruth da Silva Barbosa.

In the closest race since Brazil returned to democracy after its 1964-1985 dictatorship, electoral officials declared the election for Lula, who had 50.9 percent of the vote to 49.1 percent for Bolsonaro with more than 99.9 percent of polling stations reporting.

Bolsonaro, the vitriolic hardline conservative dubbed the "Tropical Trump", meanwhile becomes the first incumbent president not to win re-election in the post-dictatorship era.

With no word from Bolsonaro, some of his key allies appeared in public to accept the results, including the speaker of the lower house of Congress, Arthur Lira, who said it was time to "extend a hand to our adversaries, debate, build bridges". (AFP)