Jan. 3 (Bloomberg) -- Democrat Barack Obama and Republican Mike Huckabee won in Iowa's party caucuses tonight by decisive margins in the nation's first presidential nomination contest.

Senator Hillary Clinton, who has led national polls of Democratic voters, placed third behind ex-North Carolina Senator John Edwards with more than 95 percent of Democratic precincts reporting.

Former Massachusetts Governor Mitt Romney, who had led Iowa polls until last month, finished second in the Republican contest. Former Senator Fred Thompson edged Senator John McCain for third in the caucus vote.

``This is bad news for Romney and Clinton,'' said Julian Zelizer, a history and public affairs professor at Princeton University. ``Both might have afforded a tie, but a big loss like this is damaging. It undercuts their image as invincible.''

Huckabee, the former governor of Arkansas, and Obama, a senator from Illinois, interpreted their victories as expressing the desire of voters for change.

``The people of Iowa made a choice, and their choice was clear,'' Huckabee told supporters in Des Moines. ``Their choice was for change.''

``You have done what American can do in this new year, 2008,'' Obama told Iowans. ``We are one nation, we are one people, and our time for change has come.''

Interpreting Results

Both Romney and Clinton sought to minimize the significance of the Iowa results.

``Well, we won the silver,'' Romney said. ``It does not mean you're not going to come back and win the gold in the final event.''

Clinton, of New York, called the results ``a great night for Democrats'' because ``we have seen an unprecedented turnout in Iowa, and that's good news.'' She vowed to press forward, telling supporters ``I am so ready for the rest of this campaign, and I am so ready to lead.''

The caucuses narrowed the Democratic field with Senators Joseph Biden of Delaware and Christopher Dodd of Connecticut ending their bids for the nomination.

In the Republican contest, in which actual votes are reported, Huckabee had 35,401 to Romney's 26,167 with 1,531 of 1,781 precincts reporting. Thompson was in third place with 13,834 votes. McCain, who had largely bypassed the state to concentrate on New Hampshire, followed with 13,556. Texas Representative Ron Paul followed with 10,040 votes.

`Some Momentum'

The Iowa victory is ``going to give us some momentum,'' Ed Rollins, Huckabee's campaign chairman, told Fox News. ``This is obviously a great candidate. Obviously, the voters of Iowa saw that.''

Obama won 37.5 percent of the delegates selected in the caucuses with 1,771 of 1,781 precincts reporting. He was followed by Edwards with 29.8 percent and Clinton's 29.5 percent support.

Obama's top strategist, David Axelrod, predicted that the victory will give the freshman senator ``great momentum'' going into the Jan. 8 New Hampshire primary.

``The most important thing about this moment is with such resounding force the people of Iowa spoke for change in this country,'' he said.

Clinton and her aides sought to reassure supporters that her defeat in Iowa would not hobble her effort to win the nomination.

Next Contest

After congratulating Obama and Edwards, Clinton said Democrats should ``keep focused'' on ``how will we win in November'' and pick ``a candidate who will be able to go the distance.''

The former first lady, who has tried to portray Obama as untested and inexperienced, told supporters: ``I am ready for that contest.''

Clinton's campaign manager, Patti Solis Doyle, said in a statement her campaign ``was built for a marathon, and we have the resources to run a national race in the weeks ahead.''

The results of the Democratic precinct caucuses reflected a percentage of representatives won by candidates to attend subsequent caucuses and conventions that will select delegates to the Democratic National Convention in Denver. The raw vote totals for Democratic candidates is kept secret by party rules.

Unlike the Iowa Democrats, the state's Republican Party released the actual vote totals that candidates garnered among caucus goers.

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Julianna Goldman in Des Moines at jgoldman6@bloomberg.net

Last Updated: January 3, 2008 23:43 EST