Newt Gingrich handed Mitt Romney a stunning defeat in South Carolina on Saturday, adding a shocking twist to the Republican primary race that had seemed on a path to anoint the former Massachusetts governor.

"It is very humbling and very sobering to have so many people who so deeply want their country to get back on the right track," an emotional Gingrich, surrounded by family members, told his raucous supporters as they chanted "Newt can win!"in a crowded and stuffy ballroom of the Hilton hotel in Columbia, the state capital.

The former House speaker also appealed on Twitter for a flood of donations for the next-up Jan. 31 primary in Florida. "Help me deliver the knockout punch in Florida. Join our Moneybomb and donate now," said his tweet.

A sombre-looking Romney was unbowed. He vowed to battle for every vote in every state and unleashed a two-pronged attack on President Barack Obama and Gingrich simultaneously.

“This race is getting to be more interesting,” Romney told his backers at the Moore Building of the South Carolina State Fairgrounds.

Referring to Gingrich's criticism of his business experience, Romney said, "When my opponents attack success and free enterprise, they're not only attacking me, they're attacking every person who dreams of a better future. He's attacking you," he told supporters, the closest he came to mentioning the primary winner's name.

Former Pennsylvania senator Rick Santorum finished well back in third place, and Texas congressman Ron Paul a distant fourth.

Returns from 95 per cent of the state's precincts showed Gingrich with 41 per cent of the vote to 27 per cent for Romney in the state that has correctly chosen the Republican party nominee in every election since 1980.

Santorum had 17 per cent compared with 13 per cent for Paul.

"It is very humbling and very sobering to have so many people who so deeply want their country to get back on the right track," an emotional Gingrich, surrounded by family members, told his raucous supporters as they chanted "Newt can win!"

Gringrich gives Harper 'pro-American' shout-out

There was a Canadian element to Gingrich's lengthy, often rambling victory speech as he maligned the Obama administration for recently rejecting TransCanada's Keystone XL pipeline, a project he erroneously said would bring much-needed oil to Texas from "central Canada."

Gingrich, hailing Prime Minister Stephen Harper as a "conservative and a pro-American," slammed Obama's decision, saying Canada now would be be forced to sell its oil to China.

"An American president who can create a Chinese-Canadian partnership is truly a danger to this country," he said.

Chad Connelly, chair of the South Carolina Republican party, said Romney and the other candidates' defeat had more to do with what Gingrich did than what they didn't do.

“I think it points to [Gingrich’s] campaign but, most specifically, the debates this week. I think he really asserted himself and showed he’s the guy to go against Barack Obama."

Connelly said the momentum coming from Gingrich’s victory will help him raise money for future state battles.

Reversal of fortune

All eyes will now focus on Florida, where Romney maintains a strong lead, to see whether Gingrich’s win is an anomaly or the beginning of a truly competitive race.

"I think [Romney] is going to be the nominee. It’s a long campaign," said South Carolina state Rep. Phyllis Henderson. "This is only the third state. It’s on to the next state.”

Supporters in both camps credited Gingrich’s fiery debate performances in the past week with giving him the push he needed.

The results signal a complete reversal of fortune for Gingrich, who finished fourth in both Iowa and New Hampshire and who was written off last June when his entire campaign staff quit. Some Gingrich supporters were shocked by the size of his victory.

"I'm surprised how big it was. I knew he was going to win. I had good feelings. But I think the momentum has really shifted. I think this is going to be the first step for a whole 'Newt' day," said Tennessee state senator Stacey Campfield, who is the state chair for Gingrich's campaign.

"I've lived here a long time and I think I’ve been a pretty active voter and I was stunned," Betsy Crawford, of Chapin, S.C., told CBC News.

"I remember from the last campaign with Romney — people just haven’t warmed up to him."

As recent polls suggested a shift in momentum, the Romney camp had been downplaying talk of victory, instead emphasizing that their candidate has performed beyond expectations in the conservative state where he finished a distant fourth four years ago.

But the loss is still a major blow to Romney, who had led in the polls up until a few days ago, following his win in New Hampshire. Over the last 10 days, his momentum fizzled. He stumbled badly in the nationally televised debates, providing unsatisfactory answers about releasing his tax returns.

Gingrich ran into his own trouble, namely confronting allegations from his ex-wife Marianne that he had sought an “open marriage” that would include his lover, and now third wife, Callista. But the allegations seemed to have little impact on his popularity in the heavily conservative state.

In fact, his swipe at CNN's John King for asking him at one of the debates about the allegations may have endeared him to undecided Republicans. The results may reflect a backlash against the media, which Republicans have longed viewed as being biased against Republicans.

“They were upset with the mainstream media," said Romney volunteer Matt Lettelleir. "They listen to talk radio everyday complaining about the mainstream media and here Newt gets to basically slap John King and [Fox News’s] Juan Williams on national TV, and that’s really what won it for him."

Romney machine well financed

Now Gingrich faces the challenge of taking his campaign national. Although he does have large donor connections, his financial resources will be no match for the Romney machine.

Gingrich could be hard-pressed to compete in a large state such as Florida, where mass media advertising is likely to play a more important role than traditional stump politics.

But Connelly said the bump candidates get from a strong showing in South Carolina can greatly impact their coffers. He said both Arizona Senator John McCain, who won the primary in 2008, and former Arkansas governor Mike Huckabee were able to raise $10 million the week after the primary.

Although South Carolina has the reputation of political mudslinging, expect the Romney camp and pro-Romney SuperPACs – political organizations that can spend unlimited amounts of money to attack political foes or back their own candidate – to launch a major assault on Gingrich in Florida.

Too volatile

Romney could actually benefit from the South Carolina loss, as the "Anybody But Newt" forces among the GOP establishment try to stop Gingrich, who made enemies in the party during his stint as House speaker and is seen by many as simply too volatile.

Conversely, Gingrich could gain support from ultra-conservative Tea Party members and the religious right, who might abandon candidate Santorum in an effort to stop Romney.

South Carolina, which accounts for 25 delegates, has been seen as a major prize in the Republican primary race because of its ability to predict the future nominee. South Carolina Senator Jim DeMint recently said that whoever wins the state will win the race.

But every political campaign is different and records are made to be broken. For years, New Hampshire had been seen as a must-win state until Bill Clinton finished second there but eventually won the Democratic Party’s nomination.

With files from The Associated Press and The Canadian Press