Tarso Genro, one of the president’s top aides and a cabinet member, told reporters the vote would be decided in a second round after preliminary results showed the president, known popularly as Lula, was just short of the 50 per cent of votes needed to win the election outright.
The run-off vote will take place on October 29.
Lula dominated the presidential election polls but the self-styled champion of the poor failed to clear the 50 percent hurdle needed under the Brazilian electoral system to win re-election in the first round.
With almost 90 percent of the ballots counted, Lula had 49.28 percent while former Sao Paulo Governor Geraldo Alckmin garnered 40.95 percent.
A former trade union leader, Lula, 60, is highly popular among the millions of impoverished Brazilians, while Mr Alckmin, 53 is favoured by the business community, and also draws support from middle class Brazilians angered by a series of corruption scandals involving close aides of the president.
A one time shoeshine boy with little formal education, Lula enjoys widespread support among impoverished Brazilians, who make up about a quarter of the 184 million population of South America's largest nation.
While dented, his popularity has survived a series of scandals that dogged his government and the ruling PT, thanks in part to an anti-poverty program under which 11 million struggling families get up to 45 dollars a month in government subsidies.
Since Lula took office in 2003, the government has maintained orthodox economic policies and restored public finance, while increasing the minimum wage. Financial and business communities no longer perceive Lula as a dangerous firebrand leftist.
The elections are being held against the backdrop of a healthy economy, though Mr Alckmin claims growth, projected at three percent this year, is far short of its potential.