Senator Ted Cruz defeated Republican front runner Donald Trump in the Iowa caucus on Monday, while Democratic candidates Hillary Clinton and Vermont Senator Bernie Sanders reportedly ended the race in a virtual tie.

Cruz, a conservative lawmaker from Texas, won with 28 per cent of the votes, while his rival Trump landed in the second place with 24 per cent of the votes. Florida Senator Marco Rubio secured the third place with 23 per cent, Reuters reported.

"Iowa has sent notice that the republican nominee and the next president of the United States will not be chosen by the media, will not be chosen by the Washington establishment... Tonight is a victory for courageous conservatives across Iowa and all across this great nation," BBC quoted Cruz as saying.

Trump, who triggered several controversies during the presidential campaigns, said he looks forward to winning the next contest in New Hampshire next week. He also congratulated Cruz.

"We will go on to get the Republican nomination and we will go on to easily beat Hillary or Bernie... We finished second, and I have to say I am just honoured," CNN quoted Trump as saying to his supporters.

Rubio was confident despite coming third. He said: "This is the moment they said would never happen. For months, they told us we had no chance."

"They told me that I needed to wait my turn, that I needed to wait in line. But tonight here in Iowa, the people of this great state have sent a very clear message — after seven years of Barack Obama, we are not waiting any longer to take our country back."

At the Democratic front, Clinton managed a slim lead over Sanders, while former Maryland Governor Martin O'Malley, who has planned to suspend his campaign, landed in the third place with 0.5 per cent votes.

After the counting of 95 per cent of the votes, Clinton and Sanders were seen in tight race with 50.1 per cent and 49.4 per cent votes, respectively.

Clinton said she was  breathing a "big sigh of relief" after the caucuses. "It's rare that we have the opportunity we do now... To have a real contest of ideas. To really think hard about what the Democratic party stands for and what we want the future of our country to look like," she said, CNN reported.

Meanwhile, Sanders said they had made quite a progress in a very short span of time. 

"Nine months ago, we came to this beautiful state, we had no political organisation, we had no money, we had no name recognition and we were taking on the most powerful political organisation in the United States of America," Sanders told the cheering crowd.

"And tonight...while the results are still not known, it looks like we are in a virtual tie."

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