Washington: In a stunning upset, Senator Ted Cruz beat controversial Republican presidential frontrunner Donald Trump in the crucial Iowa caucuses while Democrat Hillary Clinton eked out a victory over Bernie Sanders as the race for the White House began on Tuesday.


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As the results of the Iowa Caucuses poured in throughout the night, 45-year-old Texas Senator Cruz bagged 28 percent of the total votes with a lead of over 6,000 votes against Trump's 24 percent.


With almost all the votes counted, Marco Rubio stood at the third position with 23 per cent.


Among the Democrats, it was razor-thin contest between Clinton and Sanders till the last votes, with the former Secretary of State bagging 50 per cent votes and edging out her rival who secured 49 per cent votes.


Iowa Democratic Party declared 68-year-old Clinton as the winner of the cliffhanger.


Clinton, who is aiming to become the first woman president of the US, ran neck and neck with Sanders throughout the counting of votes. Sanders had trailed behind Clinton by more than 20 points several weeks ago.


In his first reaction after coming second in Iowa, Trump said: "We finished second. I am just honoured. I want to congratulate Ted (Cruz)."


The 69-year-old real estate tycoon said he never expected such a second place finish in Iowa when he started his campaign on June 16, 2015.


Referring to the next primary destinations of New Hampshire and South Carolina, Trump exuded confidence over winning the party's nomination.


"We will go on to win the Republican nomination," Trump said and claimed that he will beat either of the potential Democratic nominee - Clinton or Sanders.


Cruz, in his Iowa victory speech, said, "Tonight is the victory for courageous conservative. Iowa has send notice that the next Republican nominee or the president would not be chosen by the media, would not be chosen by the lobbyist, or by the Washingtonians...would be chosen by the American people."


"Tonight Iowa has proclaimed to the world that morning is coming," he said amidst cheer from his supporters.


Claiming victory, Clinton said it is rare to have a real contest of ideas.


"I am a progressive to get things done for the people. Status quo is not good enough," she said with her husband and the former president Bill Clinton and daughter Chelsea Clinton standing by her side.