VIENNA — Austria's Jewish community breathed a sigh of relief at this week's election setback for Jorg Haider, the country's far-right political leader.

"We are satisfied for the time being," said Paul Grosz, president of the Austrian Jewish Communities.

There is a clear sense of relief, he added, that "at the moment, the danger of destabilizing the Austrian democracy" seems to have been avoided.

But he expressed concern that if "worst comes to worst," Haider's Freedom Party may yet be part of a governing coalition that could emerge after Sunday's elections.

In Sunday's strong voter turnout — some 83 percent of Austria's 5.7 million eligible voters cast their ballots — 38.3 percent of the voters agreed that the Social Democratic Party, headed by Chancellor Franz Vranitzky, should continue with its policies.

By contrast, Haider's right-wing, anti-immigrant Freedom Party won slightly more than 22 percent of the vote — a slight decline from the 1994 elections, resulting in the loss of one Parliament seat for the party.

Haider could still hold 41 seats in the Parliament out of a total of 183, although he lost between 3 percent and 4 percent of his previous votes.

According to pre-election polls, Haider's party, which has explicitly called for a ban on immigration, was poised to rise from its origins on the radical fringe to become Austria's second strongest party.

Instead, for the first time since he took control over the party in 1986, Haider failed to increase his share of the vote.

Despite the setback, Haider still leads the strongest far-right party in Western Europe.

The country's Jews, numbering some 7,500, were clearly concerned about any possible electoral gains by Haider.

According to an American Jewish Committee survey released in May, one in three supporters of the Freedom Party manifest strong anti-Semitic prejudice.

Last week, only days before the elections, a videotape was aired showing Haider addressing a group of former SS officers in October, telling them that they were "decent people with character."

Contributing to Sunday's lackluster performance by Haider's party were a series of pre-election disclosures of fraud and tax evasion involving Haider's friends and co-workers.

The disclosures tarnished the "clean guy" image of Haider that had worked for him until now.

Meanwhile, Austria's conservative People's Party came in second in Sunday's balloting with slightly more than 28 percent of the vote.

Sunday's vote was held after the governing coalition of the Social Democrats and the People's Party collapsed in early October over a budget dispute, forcing new elections.

According to observers here, Wolfgang Schussel, the leader of the People's Party, toppled the government during the budget negotiations because he saw a chance for a turnaround in the Austrian political landscape that he felt could propel him into the chancellorship.

The absence of a stronger showing Sunday by the People's Party is viewed here as a direct result of Schussel's refusal to explicitly rule out the possibility of forming a coalition with Haider.

Vranitzky, by contrast, consistently adopted the clearest language regarding Haider, saying that he would offer "no cooperation on a governmental level with a man who incites xenophobia and still has the strongest links to right extreme circles."

The two other parties in the election — the liberal Green Alternative, which got 4.9 percent of the votes, and the Liberals, with 5.9 percent — also drew a firm line-in-the-sand against having any coalition dealings with Haider.

Since the end of World War II, Austria has been governed by either the Social Democrats or the People's Party, often in a so-called "grand coalition" of the two parties.

Most Austrians, it is widely believed, would like to see another such coalition established in the wake of Sunday's ballot.

But for this to happen, the Social Democrats and People's Party would have to be able to work together again — after their brutal campaign fight.