Taiwan's main opposition party, the Nationalist Party or Kuomintang (KMT), has won a decisive victory in Saturday's legislative elections. Analysts say voters were dissatisfied with the current administration's performance and that this could signal a victory for the opposition in upcoming presidential elections. Andrew Ryan has the story in Taipei.

Taiwan's opposition Nationalist Party supporters celebrate the party's win, in Taipei, Taiwan, 12 Jan 2008

The atmosphere at KMT headquarters was joyous Saturday night after the party won 81 legislative seats. The ruling Democratic Progressive Party (DPP) won only 27 seats. The remaining five seats went to legislators from other parties, largely thought to be allied with the KMT.

That gives the KMT a more than two-thirds majority in the new 113-seat legislature.

The KMT's candidate for president, Ma Ying-jeou, spoke following Saturday night's victory.

Taiwan's opposition Nationalist Party leader and 2008 presidential candidate Ma Ying-jeou announces his party's win in the legislative elections in Taipei, 12 Jan 2008

Ma said the win marks the beginning his party's responsibilities, and is not a time for gloating.

At DPP headquarters, the mood was somber as President Chen Shui-Bian stepped down as his party's chairman, taking responsibility for the landslide defeat.

Mr. Chen said that in the face of his party's biggest-ever defeat, he will engage in self-reflection. He said his resignation as DPP chairman is effective immediately.

Analysts say the DPP will face an uphill battle ahead of presidential elections in March.

National Taiwan University Professor Philip Yang predicted the results of Saturday's vote will have an effect on the presidential race.

"Depending on how many seats the KMT will get. If close to two-thirds, then I believe the so-called 'chain reaction' will happen," he said.

In other words, Saturday's decisive win for the KMT could lead them to victory in the presidential vote.

Even if the DPP were to win the presidency, it would face a formidable barrier in the legislature. That's because the KMT's legislative win means it could veto legislation or even recall the president.