Jersey City Mayor Bret Schundler became the Republican gubernatorial nominee Tuesday, sweeping aside his moderate rival and possibly heralding a rightwing shift in the Garden State. 

Schundler will face Democrat Jim McGreevey in November to decide who will be the next resident of Drumthwacket, the traditional Princeton home of New Jersey's governors.

Analysts said a Schundler victory would take the state GOP in a dramatically conservative direction, abandoning decades of moderate-to-liberal policies that got candidates like former governors Christine Whitman and Tom Kean elected. The nominee typically selects the head of the state party.

Once considered a long shot, Schundler brushed aside former Rep. Bob Franks. With 88 percent of precincts reporting, Schundler had 57 percent of the votes, or 173,907, to 43 percent, or 129,387, for Franks.

"They said we could never win, but you didn't believe them did you?" Schundler said to cheering supporters he called the "Schundler Army." "If you want government to empower you and not take power over you, you need to join us."

President George W. Bush, who had been watching the race, gave Schundler a congratulatory phone call. At his victory rally were former GOP vice presidential nominee Jack Kemp and national party Chairman Jim Gilmore.

"This is a great victory for (Schundler's wife) Lynn and Bret, but more important it is a victory for the ideas of Mr. Lincoln, our founder, and Ronald Reagan," Kemp said.

The GOP party machine had favored Franks, a more moderate candidate in a largely moderate state. When Schundler was declared the winner, state GOP leaders said they would support Schundler, but acting Gov. Donald DiFrancesco refused an immediate endorsement.

"Bret Schundler needs to explain himself on the issues and his legislative agenda," he said. "I could be energized for the party. Whether I could be energized for Bret Schundler or not, he's going to determine that."

DiFrancesco and Whitman were with Franks as he made his concession speech 90 minutes after polls closed.

Franks, who served in Congress for four terms, said he would likely no longer hold public office. He promised to back Schundler.

"Only by working together can we defeat Jim McGreevey in November and keep our Republican majority in the state Senate and state Assembly," Franks said.

McGreevey handily beat a little-known opponent for the nomination in a state where Democrats outnumber Republicans 25 percent to 19 percent and the remaining 56 percent of independents are largely moderate.

McGreevey, the 43-year-old mayor of Woodbridge, has been campaigning for most of the past four years after narrowly losing to Whitman in 1997.

Schundler, 42, a onetime Democrat who now opposes abortion and supports gun ownership, spent nearly two years building a network of conservative groups and single-issue supporters.

But he played down his stance on social issues and instead focused on charter schools, lower property taxes and auto insurance, branding Franks "just another tax-hiking liberal." He also managed to deflect questions about his handling of Jersey City, just west of New York City.

As mayor, the scion of a wealthy insulation-and-packaging family and self-proclaimed ex-Wall Street whiz faced questions about his handling of the city's finances, including the city's increasing reliance on state aid on his watch. He also faced accusations that he ignored poorer minority neighborhoods while focusing on creating a gilded sheen for the city's largely white waterfront.

Franks, 49, had the backing of nearly all county Republican chairmen and sought to portray Schundler as a far-right extremist. He warned that the GOP would lose in November if a conservative won the nomination.

The same internal battle between social conservatives and centrists is being fought by Republicans in several states, including Virginia, the only other state with a governor's race this year.

Franks resigned from the House to run for the Senate last year, losing to Democrat Jon Corzine, a former investment banker who spent a record-shattering total of more than $60 million.

Franks did not join the race until April, after DiFrancesco withdrew over critical news coverage of his business dealings. DiFrancesco became governor when Whitman left to join the Bush administration as head of the Environmental Protection Agency.

The Associated Press contributed to this report