JOHANNESBURG - South Africans voted on Wednesday in an election that poses the toughest challenge to the African National Congress since the end of apartheid and could weaken its overwhelming dominance in parliament.

The ANC looks assured a fourth straight win since defeating white minority rule in 1994 under Nelson Mandela and will make its leader Jacob Zuma president weeks after he was able to get corruption charges dropped on a technicality.

But the party faces an unprecedented challenge from opposition parties hoping to capitalize on frustration over corruption, poverty and crime, and could lose the two-thirds majority that gives it the right to change the constitution and entrench its power further.

We are entering a post-liberation era. People are talking about new issues and challenges and there's also a new generation that's not attached to the liberation struggle, said independent political analyst David Monyae.

Queues snaked before dawn outside polling stations across South Africa, the continent's biggest economy and diplomatic heavyweight. With some 23 million eligible voters, a high turnout could strengthen the authority of Zuma, 67.

I voted for the ANC out of loyalty because my father was active in the struggle but I'm not satisfied with what they've done. People expected jobs, and to be comfortable but they are still living in shacks, said Margaret Nkone, 57.

I don't have a lot of confidence in Zuma but we hope he will do a better job, she complained in Soweto, a Johannesburg township that symbolized the fight against apartheid.

Many analysts believe the ANC, whose anti-apartheid credentials make it the choice for millions of black voters, will win between 60 and 66 percent of the vote, compared to nearly 70 percent in 2004.

The ANC is slightly more likely to lose its two-thirds parliamentary majority than to retain it, said Control Risks consultancy, putting the chances at 55 versus 40 percent.

A smaller ANC majority would cheer investors keen to see its grip loosened. Despite Zuma's assurances, they fear he may bow to leftist allies who say policies credited with South Africa's longest spell of growth have harmed the poor.

RECESSION

But as South Africa heads toward its first recession in 17 years, its mines and factories hard hit by the global downturn, Zuma's room for policy change is limited. Finance Minister Trevor Manuel, a market favorite, is expected to stay for now.

Our economy won't become ideological, it will stay rational, Manuel told Italy's Il Sole 24 Ore newspaper.

In thin offshore trade, the rand was bid stronger at 8.94 to the dollar after firming almost one percent on Tuesday.

Voting at his village birthplace of Nkandla, in the Zulu heartland of KwaZulu-Natal, a confident sounding Zuma said When I grew up, I did know that this day would come. Supporters of the crowd-pleasing Zuma, imprisoned alongside Mandela, brush off the graft accusations as the work of his political enemies.

A key challenge to the ANC comes from a new party formed by those loyal to former President Thabo Mbeki, ousted by the ANC amid allegations he meddled in the corruption case against Zuma, which was dropped this month.

The first credible black opposition party, the Congress of the People (COPE), has some support among the growing black middle class, but has struggled to win over the poor.

Presidential candidate Mvume Dandala said the new party was still optimistic it could bring change.

It is a baby with teeth. We can bite and I do believe the people of South Africa have heard our message, he said.

The official opposition Democratic Alliance, resurgent under new leader Helen Zille, a white South African, also hopes to boost its presence in parliament and has campaigned under a Stop Zuma slogan, with an anti-corruption message.

In the first years of our freedom most people would have tended to vote ANC, now it is no longer quite so straight forward, said Archbishop Desmond Tutu, the Nobel peace laureate who has been critical of Zuma.

People are asking questions, which is a good thing. I mean that is what democracy is.

A frail-looking Mandela, 90, smiled as he was helped up to a ballot box in Johannesburg.

One voting officer was arrested after marked ballot papers were found at a polling station, but there were no reports of major delays or disruption in a democracy that sets an example to the rest of the continent. Polls close at 9 p.m. (1900 GMT) and first results are expected late on Wednesday night.

South Africa Jacob zuma Nelson mandela