Armenian President Serzh Sarkisian on Tuesday celebrated a crushing victory in elections for a second five-year mandate, but his rival refused to recognise the result and observers complained the polls lacked competition.

Sarkisian, a shrewd former military officer in power since 2008, won Monday's polls in the small ex-Soviet state nestled in the Caucasus mountains between Turkey and Iran with 58.64 percent of the votes.

His nearest rival, former foreign minister Raffi Hovannisian, trailed in a distant second place with 36.75 percent of votes, the central election commission said after counting results from all the precincts. Voter turnout was 60 percent.

"These elections have again shown that the Armenian people can unite and take the right decision at the most important moments," Sarkisian told supporters at his campaign headquarters.

"I am proud and hope that all who did not vote for me understand the choice of the majority and we develop the country under a stable situation," he said.

But Hovannisian refused to recognise Sarkisian's victory, saying "the vote was not fair and the (official) results do not reflect people's will."

Speaking to hundreds of supporters in Yerevan's central Liberty Square, the US-born Hovannisian, who formerly practised as a lawyer in Los Angeles, insisted he was the true winner.

"I will not let the authorities steal the people's victory," he said, adding that he might seek to overturn the official results in the Constitutional Court.

Hovannisian's camp alleged a range of sometimes bizarre electoral violations, including the use of "disappearing ink" to allow multiple voting.

"These were shameful elections with a huge number of violations," Hovannisian's spokesman Hovsep Khurshudian told AFP.

However the pro-Hovannisian rally was peaceful and there was as yet no repeat of the violent tensions that marked the vote which brought Sarkisian to power in 2008 when 10 people died in clashes with the police.

Observers from the OSCE Parliamentary Assembly said the elections were an improvement on past polls but lacked real competition after two leading candidates pulled out late last year.

"This election showed improvement, but lacked genuine competition," said Tonino Picula, the head of the OSCE PA mission.

"Competition is critical if Armenia is going to live up to the aspirations of its people for a vibrant and engaging democracy."

The observers said the voting process was well organised but confirmed the ink used to stamp passports at polling stations and prove that voters had cast their ballots was not secure.

The ink "did not provide the intended safeguard against multiple voting as the ink could easily be wiped off," they said in a statement.

The authorities had been hoping for a peaceful and internationally praised process that would improve the country's chances of European integration.

The United States voiced support for the OSCE's conclusions, saying that the election was "calm and orderly" but had some "serious violations that obviously need to be investigated."

"We support the conclusions... that the elections were generally well administered and characterised by a respect for fundamental freedoms, including those of assembly and expression," State Department spokesman Victoria Nuland said.

Among concerns, she pointed to the "lack of impartiality" by some public officials and the "misuse of administrative resources" on behalf of the ruling party.

Former prime minister Hrant Bagratian came in third with just over two percent of the vote, while Soviet-era dissident Paruyr Hayrikyan came in fourth.

The election was also clouded by a mysterious assassination attempt against Hayrikyan last month that at one point risked derailing the polls entirely. But the candidate in the end opted not to use his right to ask for a delay.

The outcome was already clear in December when the highly popular leader of the Prosperous Armenia party -- super-rich former arm-wrestling champion Gagik Tsarukian -- said he was out of the race and Armenia's first post-Soviet president Levon Ter-Petrosian said he was too old for the country's top job.

The OSCE PA said the lack of other top candidates "seems to have contributed to apathy and a lack of trust among voters" as campaigns focused on personalities rather than political platforms.

Sarkisian now has a major task to fight poverty and unemployment with the World Bank estimating that 36 percent of Armenians live below the poverty line. Economic hardship has driven nearly a million Armenians out of the country over the past two decades.

Meanwhile no final peace deal has yet been reached with Azerbaijan over the Armenian-controlled Azerbaijani region of Nagorny Karabakh as the risk of a new conflict remains palpable.

Sarkisian, 59, is a veteran of the 1990s war with Azerbaijan over Nagorny Karabakh and derives much of his popularity from a tough can-do militaristic image.