A secular tycoon celebrating his election as Jerusalem mayor on Wednesday vowed to turn the Holy City into a world metropolis and bolster its disputed status as Israel’s "undivided" capital.

Nir Barkat won 52 percent of the vote in Tuesday’s poll, routing an ultra-Orthodox rabbi, a scandal-plagued Russian-Israeli billionaire and a pro-cannabis candidate.

Media hailed his triumph as a secular revolution after five years under ultra-Orthodox Mayor Uri Lupolianski.

Barkat, 49, swept to victory on a hardline ticketul businessman with a penchant for natty suits faces an uphill battle in a city struggling with rampant poverty, massive debt and a growing gap between Jewish and Palestinian neighborhoods.

"Tonight Jerusalem has won, tonight Israel has won, tonight the Jewish people have won," Barkat told supporters in a victory speech at his campaign headquarters.

"This victory belongs to all those who love and appreciate our incredible city, the eternal capital of the Jewish people. The victory belongs to right and left, religious and secular, Jews and Arabs"

A former member of caretaker Prime Minister Ehud Olmert’s Kadima, Barkat prides himself on having quit the centrist party after "exposing" what he said was a "plan to divide Jerusalem."

His hardline stance won him the backing of the city’s religious right-wing parties which represent a hefty part of Jerusalem’s population of 700,000.

He promised to build new Jewish neighborhoods in Arab east Jerusalem, which Palestinians want as the capital of their promised state.

The vast majority of Jerusalem’s Jewish population considers Israel’s designation of the city as its "eternal and undivided" capital a sacred mantra, even though it is rejected by the international community.

The Jerusalem issue is a main sticking point in the U.S.-brokered Middle East peace talks.

The international community and the Palestinians have criticized Israel for continuing Jewish settlement activity in the eastern parts of the city, as well as in the rest of the occupied West Bank.

The election was again boycotted by residents of east Jerusalem, home to some 250,000 Palestinians.

Palestinians have shunned municipal elections since Israel captured east Jerusalem in the 1967 Six-Day War and later annexed it in a move not recognized by the international community.

Barkat’s victory in Jerusalem highlights the growing rift between religious and secular Jews in Israel’s poorest city.

"I see the big picture for Jerusalem," said Barkat, who says his role model is New York Mayor Michael Bloomberg, and who wants to turn the Holy City into "an international metropolis."

The incoming mayor has promised new legislation to attract companies, especially from Israel’s large computer industry, and young families in a bid to reverse an exodus from Jerusalem.

"Jerusalem must now carry out a revolution on a huge scale," the Maariv daily said in an editorial. "The capital city, which became the poorest and most neglected city in Israel, needs an earthquake that will leave no stone unturned."

"The tens of thousands of people who abandoned the city have to come back and rebuild everything anew," the newspaper said.

Across the country, candidates of the ruling Kadima won about 50 of the more than 150 municipal councils, but the elections also saw a sharp rise in support for environmentalist parties.

In Tel Aviv, Mayor Ron Huldai won a third term after 10 years marked by an impressive economic boom that has turned the coastal city into a vibrant financial and cultural centre.