Voters were asked in a referendum to approve legislation adopted by parliament in 2008 that extended the accord and endorsed its expansion to the two new European Union members.

What was expected to be a close vote ended in a landslide victory for the government with 59.6 saying yes to 40.4 against, according to official results released through the Swiss news agency ATS.

The outcome brought relief from the Swiss political, business and social establishment, which pressed for an extension of the accord.

Justice Minister Eveline Widmer-Schlumpf said the Swiss made a "good, objective decision with a mind to the future", a view echoed by the top employers’ association and trade unions.

Voters, confronted by tough economic times, opted for stability, said centre-right Radical Party president Fulvio Pelli.

Bern and Brussels warned that a ‘no’ vote would harm a range of agreements on trade, agriculture and transport that add about one percent to Switzerland’s economic growth.

European Commission president Jose Manuel Barroso praised the "excellent result", saying it "opens the way to strengthening ties in areas of mutual interest".

The free labour accord, which also allows Swiss citizens to take jobs in the EU, was credited with helping Switzerland’s economy grow in recent years by overcoming a shortage of skilled labour.

But the extent of the government’s victory surprised observers, after recent opinion polls gave only a slight lead for the pro-Europeans.

Campaigning set non EU-member Switzerland’s economic interests against traditional popular fears about immigration and the neutral Alpine nation’s independence.

The struggling global economy, which affected prosperous Switzerland in recent months, compounded the uncertainty.

Opponents in the Swiss People’s Party (SVP) raised fears of a surge in immigration from Romania and Bulgaria, which they dubbed "Europe’s third world", and warned of a threat to Swiss jobs.

"I think that the leap into the unknown, the fears about unforeseen consequences probably prompted those who were hesitant to vote yes", SVP parliamentarian Guy Parmelin said on Swiss television.

But party vice president Yvan Perrin said, "I have the feeling… that we would have won in a month or a month and half’s time because people are starting to realise our fears are real".

Switzerland’s unemployment rate rose to 3.3 percent in January, after falling until recently.

More than one million of Switzerland’s 1.62 million foreign residents come from the EU and western Europe.

Their number grew by nearly 200,000 since limits on employing EU citizens were gradually lifted from 2002.

Some 400,000 Swiss citizens live in the European Union.

The accords on Bulgaria and Romania include a seven-year transition period that will gradually open up the Swiss jobs market to them.

The focus now shifts to more tense areas of the Swiss-EU relationship.

While the Swiss are looking for more bilateral deals to open up farm trade and electricity markets, the EU wants Switzerland to end regional tax perks that encourage some European companies to relocate offices there.

The newspaper NZZ am Sonntag reported Sunday that EU officials were ready to raise the company tax issue at talks on 13 February.

"We have to clarify many things and we’re waiting for some decisions so that they can carry on", EU Ambassador in Switzerland Michel Reiterer told AFP.

Also on Sunday, voters in Zurich canton approved a leftist proposal to abolish special personal tax perks that attract rich foreign residents to live the region.

[AFP / Peter Capella / Expatica]