U.S. Sen. Lisa Murkowski (search), appointed to the Senate in 2002 by the governor — who also happens to be her father — took a step closer to retaining her seat with a Republican primary win, and next faces a popular former two-term Democratic governor.

With 92 percent of precincts reporting early Wednesday, Murkowski had 38,361 votes, or 58 percent, while former state Senate President Mike Miller garnered 24,516, or 37 percent. Wev Shea, former U.S. attorney for Alaska, was in third place with 2,480 votes, or 4 percent.

Murkowski will now take on Gov. Tony Knowles (search), a popular Democrat whose presence in the race has transformed heavily GOP Alaska into an unlikely battleground in the fight for control of the Senate.

"The eyes of the country are upon what's going on this race," Murkowski said.

Knowles faced token opposition. The former governor had 34,070 votes, or 95 percent, easily outdistancing his two rivals: Don Wright, a former president of the Alaska Federation of Natives, and Theresa Nangle Obermeyer, a former member of the Anchorage School Board.

"I'm going to work hard, shake hands, talk to Alaskans, listen to Alaskans, and continue the message I've heard from so many Alaskans over the past month," he said, adding that he would focus on national security, jobs, health care and education.

Murkowski's victory was her first test in a statewide election. She is a former state lawmaker who was appointed to the Senate in 2002 by her father, newly elected Gov. Frank Murkowski (search). He gave his seat to his daughter after the Legislature changed state law to allow the new governor and not the incumbent — Knowles in this case — the power to fill Senate vacancies.

Murkowski's challengers made nepotism an issue in the race, along with attacking her credentials as a conservative. Miller, 53, claimed that before joining the Senate, Murkowski backed gun control, abortion rights and tax increases.

Knowles, 61, and Lisa Murkowski, 47, are two of the biggest political names in Alaska.

Knowles served as mayor of Anchorage for six years in the 1980s and was governor from 1994 to 2002. Murkowski served in the Legislature for four years before being appointed to the Senate.

The debate over opening the Arctic National Wildlife Refuge (search) to oil drilling became a prominent issue in the race. Most Alaskans support opening the refuge, and both Knowles and Murkowski back drilling.

Murkowski has been endorsed by President Bush and Vice President Dick Cheney, who made a campaign appearance in Anchorage. She's also gotten the blessing of Alaska's senior senator, Ted Stevens.