The Conservatives are poised to win the UK General Election but not by an overall majority, which would leave the UK with a hung parliament, according to the latest BBC forecast.
Such results would be a backfire to Ms May's plan to secure the election before strengthening her hand in divorce talks with the European Union.
Ms May is even receiving criticism from her own party, with MP Anna Soubry telling the BBC on Thursday morning London time that she should consider her position.
Britain's Labour Party is ready to form a minority government if it is confirmed that no party has won an absolute majority in national election, according to the Labour Foreign Secretary.
"It looks tonight like we could form the next government," Emily Thornberry told the BBC on Thursday night.
According to exit polls conducted by the BBC, ITV and Sky television stations, Prime Minister Theresa May's Conservative Party would gain 314 seats, 17 lower than they had in the House of Commons before the parliament was dissolved, while Jeremy Corbyn's Labour Party is forecast to gain 34 seats, taking it to a total of
266 seats.
A party needs 326 seats to form a majority in the 650-seat parliament.
Britain's Opposition Labour Party is leading with 296 seats and the Conservative Party has 251. The Scottish National Party has 34 seats, the Democratic Unionist Party has 11 and the Liberal Democrats 10.
Labour Leader Jeremy Corbyn told supporters on election night Ms May had lost her mandate.
"This election was called in order for the prime minister to gain a large majority in order for her to assert her authority," he said in London.
"If there is a message from tonight's results, it's this: the Prime Minister called this election because she wanted a mandate," Corbyn said. "Well the mandate she's got is lost Conservative seats, lost votes, lost support and lost confidence."
"I would have thought that's enough to go, and make way for a government that will be truly representative of all of the people of this country."
Ms May says she knows the country needs a period of stability and whatever the results, the Conservatives will fulfill its duty to provide it.
Brexit Minister David Davis said results so far pointed to a transformation taking place in Britain, but it was too soon to call the result.
"This is a much more disruptive election - all sorts of changes are going on geographically in Scotland, in the north of England," Davis told ITV. "It's rather early to make rash predictions."
Stunning blow for May
May unexpectedly called the snap election seven weeks ago to increase the slim majority she had inherited from predecessor David Cameron and strengthen her hand before launching into arduous divorce talks with the European Union, set to start in just over a week.
Instead, if the exit poll showing strong gains for Jeremy Corbyn's Labour is anywhere near accurate, she risks losing power in what would be an ignominious end to her 11 months at Number 10 Downing Street.
Even if the exit poll has underestimated the number of Conservative seats, as it did in 2015, and the party ends up with a slim majority, May will be so weakened that she may not be able to keep the job.
"MAYHEM" screamed the headline in the tabloid Sun newspaper. "Britain on a knife edge," said the Daily Mail.
The BBC reported that 76 seats appeared too close to call. As the first results came in, it appeared that anti-EU party UKIP had lost a large chunk of its vote share, which had split evenly between the Conservatives and Labour. Pundits had expected the UKIP vote to go strongly to the Conservatives.
Until the final results become clear, it is hard to predict which party might end up leading the next government and steering Britain into the Brexit talks.
Political deadlock could derail negotiations with the other 27 EU countries ahead of Britain's exit from the bloc, due in March 2019, before they even begin in earnest.
Brexit talks were scheduled to start on June 19 but could now be delayed, a source of major uncertainty and concern for investors.
Senior Conservatives were quick to say exit polls had been wrong in the past. In 2015, the exit poll suggested they would fall short, but when the actual results came in they had a slim majority.
Sterling fell by more than two cents against the U.S. dollar as markets digested the prospect of extreme political uncertainty and even the risk of a second election this year.
"A hung parliament is the worst outcome from a markets perspective as it creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain," said Craig Erlam, an analyst with brokerage Oanda in London.
Failed gamble
The exit poll pointed to an extraordinary failure for May, who was enjoying opinion poll leads of 20 points and more when she called the election.
By putting her fate in voters' hands, three years before an election was due, she had hoped to secure a much stronger mandate that would boost her in complex negotiations on the terms of Britain's EU departure and its future trade relationship with the bloc.
Should she be forced to step down as prime minister after this election, that would make her tenure the shortest of any British premier since the 1920s.
During the campaign, she backtracked on a major proposal on care for the elderly, opted not to debate her opponents on television and faced questions over her record on security after Britain was hit by two Islamist militant attacks that killed 30 people.
May was widely derided for endlessly repeating her slogan of "strong and stable leadership" despite her u-turn on the care policy. She gave few policy details and appeared mostly at tightly controlled events. Some critics nicknamed her "the Maybot".
Her opinion poll lead narrowed sharply, although the consensus before the exit poll remained that she would win a majority.
"There will be a huge post-mortem about having the general election, about the manifesto ... about the style of the campaign," former Conservative finance minister George Osborne said on ITV.
UK Election: What's at stake
'Completely catastrophic'
By contrast, Labour's Corbyn, a veteran socialist who had initially been written off as a no-hoper, was widely deemed to have run a strong, policy-rich campaign that enthused many followers.
If the exit poll is correct, Corbyn could attempt to form a government with smaller parties which, like Labour, strongly oppose most of May's policies on domestic issues such as public spending cuts.
If Labour does take power with the backing of the Scottish nationalists and the Liberal Democrats, both parties adamantly opposed to Brexit, Britain's future will be very different to the course the Conservatives were planning and could even raise the possibility of a second referendum.
The exit poll forecast the Scottish National Party (SNP) would win 34 seats, the center-left Liberal Democrats 14, the Welsh nationalist party Plaid Cymru three and the Greens one. Other parties were projected to win 18 seats.
"If the poll is anything like accurate, this is completely catastrophic for the Conservatives and for Theresa May," said Osborne.
Japanese bank Nomura said that based on the exit poll and on the results in the first two constituencies to declare, its election model suggested the Conservatives would end up winning 331 seats, a slim majority. However, it said that it would be able to produce a more accurate forecast when 10 percent of results were in, which will be around 0100 GMT.
For May, who went into the campaign expecting to win a landslide, even a narrow win later in the night would leave her badly damaged.
Brexit in Limbo?
May herself had said during her campaign: "It’s a fact that if we lose just six seats, we will lose our majority and Jeremy Corbyn will become prime minister," predicting that the Scottish Nationalists and Liberal Democrats would back him.
Whilst this was campaign rhetoric designed to drive support for her party, it also suggested she saw little prospect of forming a coalition with other parties, almost all of whom are opposed to her Brexit strategy built around leaving the EU's single market, controlling immigration and escaping the jurisdiction of EU courts.
The center-left, pro-EU Liberal Democrats, who were in coalition with the Conservatives between 2010 and 2015, looked unlikely to go down that route again. They were close to wiped out in the 2015 election.
Their former leader Nick Clegg, who was deputy prime minister during the coalition years, said the party would not prop up a Conservative government.
In Northern Ireland, the Democratic Unionist Party (DUP), a natural ally of the Conservatives, said it would negotiate with the Conservatives if they fell short of a majority, as both parties had common ground.
Any delay in Brexit talks would reduce the time available for what are expected to be the most complex negotiations in post-World War Two European history.
Labour has said it would push ahead with Brexit but would scrap May's negotiating plans and make its priority maintaining the benefits of both the EU single market and its customs union, arguing no deal with the EU would be the worst possible outcome.
It also proposed raising taxes for the richest 5 percent of Britons, scrapping university tuition fees and investing 250 billion pounds ($315 billion) in infrastructure plans.
