VILNIUS (Reuters) - Lithuania's ruling Social Democrats sank to a distant third place in the first round of national elections, leaving center-right parties in a strong position to form a new coalition government, surprise results showed on Monday.

After a campaign fought largely over Lithuania's sluggish economy, first place went to the center-right Lithuanian Peasants and Greens party with 21.6 percent, 728 votes ahead of the Homeland Union party.

The center-left Social Democrats had been forecast to win Sunday's vote in opinion polls that have been unreliable in the past.

But the party took only 14.4 percent of the vote, paying the price for failing to rejuvenate an economy that has struggled to catch up with the richer countries in Europe, analysts said.

The vote elects half of parliament in the EU member state. Run-offs in voting districts on Oct. 23 will decide the rest.

"The chance of the government continuing is now almost zero", said Kestutis Girnius, associate professor at Institute of International Relations and Political Science in Vilnius.

"The government was seen as ineffective and corrupt. And it played the central role in adapting a new labor code that more than half the voters strongly disapproved of."

Lithuania's outspoken president, Dalia Grybauskaite, has accused the government of failing to push through reforms and is not on speaking terms with the prime minister after alleging corruption in his government earlier this year.

"People said very clearly what they think about the current government and supported responsibility, transparency and changed", said Grybauskaite in a statement on Monday.

The make-up of the next government will depend on the details of negotiations, with a coalition of the Lithuanian Peasants and Greens party, the Homeland Union party and its smaller ally, the Liberal Movement party, seen as one likely combination.

The Lithuanian Peasants and Greens party, an also-ran in the past elections, attracted large numbers of protest votes, say analysts, while the center-left Homeland Union was ejected from power in the previous national election after implementing unpopular austerity measures.

"After the run-offs, Lithuania will get a new government ... we will be in the new coalition," Homeland Union leader Gabrielius Landsbergis told reporters.

The Social Democrats garnered 18.4 percent of the popular vote in the last vote in 2012, then ended up as the biggest party in parliament after the run-off stage.

(Reporting By Andrius Sytas; Editing by Niklas Pollard and Andrew Heavens)