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Lisa Murkowski Concedes Alaska Primary Race

Updated at 12:41 a.m. ET

Republican Sen. Lisa Murkowski was booted from office in the Republican primary Tuesday by a little-known conservative lawyer backed by former governor and vice presidential candidate Sarah Palin, in arguably America's biggest political upset of the year.

Joe Miller, backed by Palin and the ultraconservative Tea Party Express movement, became the latest newcomer to the national political stage to take down an incumbent in 2010 amid deep dissatisfaction with the Washington establishment.

Miller's win was a major victory for the anti-tax tea party movement and marked the first time it had defeated a sitting senator in a primary. Tea partiers had knocked off Republican Sen. Bob Bennett at a state convention in May.

Interactive Map: CBS News Election 2010 Race Ratings

Murkowski trailed Miller by 1,668 votes after the Aug. 24 primary. Election officials began counting absentee and outstanding ballots Tuesday, and Murkowski made slight gains. But after more than 15,000 ballots were counted, she remained 1,630 votes behind.

"We all know that this has been a long week, a terribly long week," she said at campaign headquarters while conceding. She said that while there were still outstanding votes, "I don't see a scenario where the primary will turn out in my favor, and that is a reality that is before me at this point in time."

"And for that reason, and for the good of the state of Alaska ... I am now conceding the race for the Republican nomination."

The stunning result was a huge validation of the political power of Palin as the former Alaska governor has been playing kingmaker in the November congressional elections ahead of a potential 2012 White House run.

Miller, 43, is an Ivy League-educated lawyer, West Point graduate and decorated Gulf War veteran who cast Murkowski as too liberal and part of the problem in an out-of-control Washington. It is a campaign strategy that has helped oust other incumbents this year and that Republicans will employ again in November as they look to take back Congress.

In a statement, Miller thanked Palin, the tea party movement and Alaska supporters.

"Now is the time for all Alaskans to come together and reach out with our core message of taking power from the federal government and bringing it back home to the people," he said. "If we continue to allow the federal government to live beyond its means, we will all soon have to live below ours."

Murkowski has proudly touted her seniority after eight years in office, and said her roles on influential committees put her in a strong position to ensure Alaskans' voices are heard. Alaska has long been heavily reliant on federal money to run - a legacy largely carved out by former Sen. Ted Stevens, who died in a plane crash this month.

After keeping a low profile for much of the race, Palin recorded an automated phone call for Miller in the campaign's final days and touted him as a "man of the people" on her Facebook page. She also repeated a claim that Murkowski had waffled on her position on repealing the historic federal health care overhaul - claims the senator has called false.

Palin has been on a losing streak as of late with her candidates faltering, and many were expecting similar results in Alaska with Murkowski holding such a name-recognition and fundraising advantage. Palin also still remains a highly divisive figure in her home state.

But as the results began coming in on election night, it became increasingly clear that Miller connected with the voters and tapped into anti-incumbent anger among Republicans.

Aside from a failed legislative bid in 2004, the Kansas-raised Miller had no experience running in political races before jumping into the race to take on Murkowski.

Miller also had the blessing of the tea party movement. The California-based Tea Party Express reported spending at least $550,000 for Miller.

Palin trounced Murkowski's father, Frank, in the 2006 gubernatorial primary - the race that would launch her national political career. The women have clashed on issues like health care, though they've denied any bad blood between them.

Murkowski has fought back against Miller and Palin's claims. A radio ad on the election's eve called Miller out as twisting the truth about Murkowski's position on the federal health care overhaul. Miller has stood by his statements.

The race was disrupted when Stevens died in a plane crash, with both candidates briefly suspending campaign ads.

Murkowski was appointed to the Senate at the end of 2002 by her father and won her first term in 2004.

During a speech in which her voice wavered at times, she said confidently that once she completes her term, "I'm coming back home."

Miller becomes the favorite in the heavily Republican state. He will face Democrat Scott McAdams, a small-town mayor, in the November general election.

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