Icelanders have voted to elect a new parliament after disagreements over immigration, energy policy and the economy forced Prime Minister Bjarni Benediktsson to pull the plug on his coalition government and call an early election.

All polling stations managed to open despite fierce weather in the sub-Arctic nation that left roads in many areas blocked by snow.

Ballot counting began after polls closed at 10pm local time, with results expected early Sunday.

This is Iceland’s sixth general election since the 2008 financial crisis devastated the economy of the nation and ushered in a new era of political instability.

People cast their ballot in the Iceland election
People have been casting their ballot in the Iceland election (Marco Di Marco/AP)

Opinion polls suggested the country could be in for another upheaval, with support for the three governing parties plunging.

Mr Benediktsson, who was named prime minister in April following the resignation of his predecessor, struggled to hold together the unlikely coalition of his conservative Independence Party with the centrist Progressive Party and the Left-Green Movement.

“My expectation is like, something new (is) going to happen, hopefully,” said Horour Guojonsson, voting in the capital, Reykjavik. “We always have had these old parties taking care of things. I hope we see the light now to come in with a younger people, new ideas.”

Iceland, a nation of about 400,000 people, is proud of its democratic traditions, describing itself as arguably the world’s oldest parliamentary democracy.

The island’s parliament, the Althingi, was founded in 930 by the Norsemen who settled the country.