The people of Bougainville have voted overwhelmingly in favour of the autonomous region becoming independent from Papua New Guinea - a major step towards the group of islands becoming the world's newest nation.

Bertie Ahern, the Chairman of the Bougainville Referendum Commission, declared today that 176,928 people - around 98 per cent of voters - had backed independence in a referendum.

Only 3,043 of voters had supported the option of the island group remaining part of Papua New Guinea, but with more autonomy.

The announcement prompted loud cheers, applause and tears as dignitaries burst into song, with strains of the islands' anthem 'My Bougainville' ringing out.

Voters cast their ballots at a men-only voting booth in the Bougainville referendum in Teau, Bougainville, Papua New Guinea

Bougainville is an autonomous region in Papua New Guinea, consisting of Bougainville Island, Buka Island, and a number of outlying islands and atolls

'Happy is an understatement' said nursing graduate Alexia Baria, 'you see my tears, this is the moment we have been waiting for.'

The referendum was approved by the Papua New Guinea government but it is said the result is non-binding.

It concludes a decades-long peace process and a long recovery from a brutal civil war between Bougainville rebels, Papua New Guinea security forces and foreign mercenaries that ended in 1998 and left up to 20,000 people dead. At the time, this was 10 per cent of the population.

'Now, at least psychologically, we feel liberated,' said John Momis, the priest-turned-leader of the autonomous region's government.

Members of the Bougainville Women's Federation cheer in Buka after results were announced in an independence referendum today

Ballot boxes arrive from south Bougainville for registration at the Buka count centre ahead of the result announcement

But independence will not be immediate, a long political process lies ahead and leaders face formidable financial and administrative challenges to turn a cluster of poor Pacific islands into a fully-fledged nation.

The result must first be ratified by Papua New Guinea's parliament - where there is opposition to the move for fear it may spark other independence movements in a nation defined by disparate linguistic and tribal groups.

But the scale of the victory for the pro-independence side will heap pressure on Port Moresby to endorse the outcome.

'There's no misinterpreting this result - Bougainville wants independence' said Shane McLeod of Sydney's Lowy Institute. 'The strength of the vote would seem to make it all but inevitable.'

'Port Moresby will need to quickly digest the result,' he added, 'they'll need to be ready to talk about the timetable for independence.'

Speaking in Buka, Ahern urged all sides to recognise a vote that was about 'your peace, your history, and your future' and showed 'the power of the pen over weapons'.

Puka Temu, Port Moresby's minister for Bougainville affairs, said 'the outcome is a credible one' but asked that voters 'allow the rest of Papua New Guinea sufficient time to absorb this result'.

Voting began on November 23 with ecstatic residents - some festooned in grass garlands - forming makeshift choirs that stomped through the streets, waving independence flags, blowing bamboo pipes and chanting in chorus.

The vote officially ended on December 7 and, according to the Bougainville Referendum Commission, it was completed without major incident.

Many Bougainvilleans were realistic about difficulties ahead. Gerald Dising, a store owner who travelled from the far south of Bougainville to witness the result, described it as a 'first hurdle' being passed.

Politicians, he said, 'now have a huge task to implement the wishes of our people.'

But former radio announcer Peter Sohia was optimistic. 'We may not have the best hospitals, the schools or the road and infrastructure, but our spirit is high and that will get us to where we want', he said.

People queue to vote at a polling station in the capital Buka in a historical independence vote on November 25

Residents hold a Bougainville flag at a polling station during a non-binding independence referendum in Arawa in November

Since French explorer Louis de Bougainville arrived on the palm-fringed Melanesian archipelago more than two hundred years ago, control has passed from Germany, to Australia, to Japan, to the United Nations and eventually to Papua New Guinea.

Many Bougainvilleans however feel a closer cultural affinity to the nearby Solomon Islands, with a strong provincial identity that differs from the tribal factions of other regions of Papua New Guinea.

The 1988-1998 war had its roots in a struggle over revenues from the now-shuttered Panguna copper mine, which at one point accounted for more than 40 per cent of Papua New Guinea's exports.

The mine is estimated to still hold more than five million tonnes of copper and 19 million ounces of gold - worth billions of dollars at current market prices.

Today's results will prompt a dash for influence among regional powers China, the United States and Australia.

Attuned to regional rivalry, senior figures in Bougainville's independence movement have already tried to start a bidding war - warning the nascent nation would turn to Beijing if Western countries do not play their cards right and offer financial support.