The DUP agreed to supporting to the government on a "confidence and supply" basis, which would involve it supporting a Conservative minority government on key votes in parliament but not forming a formal coalition partnership.
May called the snap election in the hope of increasing her majority and strengthening Britain's hand in exit talks with the European Union with a "strong and stable government". May had been expected to win comfortably.
The result could be bad news for the Scottish National Party, which was predicted to lose 20 of its 54 seats.
The socially conservative, pro-Brexit Democratic Unionist Party's 10 seats give the right-wing Conservatives a fragile but workable majority, which May said would allow her to negotiate a successful exit from the EU. The shock defeat for Conservatives - despite the pre-poll projections of a comfortable majority - was seen by the British media as a "humiliation" for May to continue in her position.
SIEGEL: The Conservatives evidently plan to govern with the Democratic Unionists, the dominant Protestant party in Northern Ireland providing the few votes in the House of Commons that they'll need to have a working majority.
"As I reflect on the result, I will reflect on what we need to do in the future to take the party forward", May said before adding "I obviously wanted a different result". "She's a zombie prime minister". As of Friday afternoon, with one constituency yet to declare, the Conservatives remain the largest party with 318 seats, having lost 12 seats, and Labour with 261 seats.
It is also not known if the other parties will be determined to obstruct her path, and come together to let Mr Corbyn - known to be on the left wing of Labour - lead a new government.
Alastair Campbell, the former Labour Party spin doctor who worked with former prime minister Tony Blair, hit out at the deal, saying May threatened the peace process in Northern Ireland by negotiating a "sordid, unsafe and distasteful" deal with the DUP.
"The mandate she's got is lost Conservative seats, lost votes, lost support and lost confidence", he said. May, who after (mildly) opposing Brexit in the referendum accepted the verdict of the voters, thought that by holding an early election she could strengthen her ability to secure a definitive divorce from the European Union on terms favorable to the United Kingdom, a so-called "hard Brexit". And maybe - I was speaking to one minister today who said effectively, Brexit is a dead duck.
May also reappointed an old adversary - Michael Gove, a former rival for the Conservative leadership whom May fired from the Cabinet when she took office past year.
EU Economy Commissioner Pierre Moscovici, meanwhile, said May had "lost her bet", while the timetable for Brexit talks, due to begin in 10 days' time, has been thrown into disarray, raising suggestions that it could be extended.
"At this time, the country needs a period of stability", and "it will be incumbent on us that we provide that period of stability", she said.
"It seems now clear that his approach to Labour politics resonates with the public and he is undeniably strengthened", he said. As she was resoundingly re-elected to her Maidenhead seat in southern England, May looked tense and did not spell out what she planned to do.
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