Arnie will be governing one of the world's largest economies

A huge challenge for the Republican former bodybuilder is tackling the richest American state's $38bn budget deficit, while dealing with a state legislature dominated by Democrats.

"I want to be the governor for the people," he said, pledging to reach out to everyone in the state - across the political, ethnic or religious spectrum.

"For people to win, politics as usual must lose," he told supporters, referring to the partisan bickering that has bedevilled California politics.

The new governor, who will take office next month, pledged to restore trust in California's government and instil fiscal discipline.

Landmark vote

It is the first time in the state's history that Californians have voted to sack their governor mid-term.

We have tough choices ahead... Shall we rebuild our state together or shall we fight among ourselves? Arnold Schwarzenegger Arnie's victory speech Result dominates US media Austria hails Arnie victory

President George Bush congratulated Mr Schwarzenegger by phone, saying he was "proud of the race he ran" and "looked forward to working with him", a White House spokesman told reporters.

With almost all the votes counted, Mr Schwarzenegger secured 48%.

Republican activists had triggered the recall vote - the first in 82 years - following frustration at the budget deficit, high levels of unemployment and struggling schools.

The BBC's Justin Webb says the people who voted for Mr Schwarzenegger will soon want to see concrete policies and results from the new governor who has been short on detail and "big" on promises.

Mr Schwarzenegger did not formally rule out tax rises even as he campaigned against them.

That leaves the way open for him to follow Ronald Reagan, who raised taxes twice when he was governor of California.

Mr Schwarzenegger is the second Hollywood star to become governor of California, after Mr Reagan.

The BBC's David Willis in Los Angeles says the big political problem for Mr Schwarzenegger is that he is not fully in control of the money-raising process.

Large parts of the state budget are already earmarked for projects endorsed by referendums, and cannot be tampered with.

His election has sent a shockwave across America in an age of discontent with conventional politics and could set a trend, our correspondent says.

The crisis in California's state funding coincided with the economic slowdown that followed the end of the 1990s technology boom.

Excitement

In a two-part ballot, voters were asked if they wanted to recall, or sack, Governor Davis.

Regardless of their decision on the recall, they also had to indicate who they preferred among the 135 alternative candidates running.

With 99% of electoral precincts reporting results, 54.9% wanted a recall, against 45.1% opposing it.

Mr Schwarzenegger won with 48.2% support. His closest rival, Lieutenant Governor Cruz Bustamante, a Democrat, garnered 32.2%.

"Today California has given me the greatest thing of all, you have given me your trust by voting for me," Mr Schwarzenegger said, acknowledging victory.

HAVE YOUR SAY Recall all US politicians - elect Hollywood! John Collins, London Send us your comments Reaction in quotes

There had been unprecedented interest in the vote and election officials reported long queues and a shortage of parking places.

Earlier, Mr Davis told his supporters voters had decided "it was time for someone else to serve and I have accepted their judgement".

Mr Schwarzenegger had been attacked during the campaign, after accusations that he sexually harassed women and once praised Hitler.

Stunt double Rhonda Miller, who worked on two Schwarzenegger films in the early 1990s, became the latest woman to claim that the bodybuilder turned actor had abused her.

Gray Davis: "Time for someone else to serve"

In response, Mr Schwarzenegger repeated an apology he made last week for "rowdy behaviour" on film sets, but denied groping Ms Miller.

The Los Angeles Times reported last week that at least six women alleged similar behaviour over a period of 25 years.

Mr Davis had received backing from senior Democrats, including Bill Clinton, Al Gore and Barbra Streisand.

Other candidates included the publisher of Hustler magazine, a porn movie star, and a former child actor.