Fans celebrate in the streets of Madrid.

THE ASSOCIATED PRESS

MADRID, Spain -- Spain erupted in wild celebration on Sunday after the national football team won its first World Cup following Andres Iniesta's extra-time goal in a 1-0 victory over the Netherlands.

An estimated 300,000 people formed a sea of red and yellow to pack Madrid's downtown Paseo de Recoletos boulevard to watch the final from Johannesburg on giant screens and celebrated at the final whistle as Spain became world and European champions.

The celebrations were easily the biggest ever held in living memory in Spain.

Fireworks lit up the city sky as people herded out onto the streets. Television shots showed exuberant partying in jammed town squares across the country, from Zaragoza in the northeast to Seville in the southwest.

Spain, long tagged a perennial underachiever before winning the 2008 European Championship to end a 44-year title drought, had never before gone past the quarter-finals. The team finished fourth at the 1950 World Cup when the playoff system was different.

Prime Minister Jose Luis Rodriguez Zapatero, whose poll numbers have dropped due to the country's economic woes, said he celebrated the win with some Catalan sparkling wine. It was a fitting toast for a team with so many players from his favourite club, Barcelona.

"We raised a glass of cava and a few tears came to my eyes, which is unusual for me, because I know how to control my emotions," Zapatero said. "They were 120 intense minutes for me. It was an epic victory. We all feared penalties. This is heroic and it will go down in the history of our country."

A deafening roar rose from Madrid, including the sound of blaring vuvuzuela horns imported from South Africa, when captain and goalkeeper Iker Casillas lifted the World Cup trophy at Soccer City.

Tens of thousands of people had put up with near 40 C from early in the day to claim the best positions before the giant screens in major plazas in towns and cities.

One banner amid the masses in downtown Madrid read "Octopus Paul, Forever!" with a crudely drawn picture of the octopus from Germany who had correctly forecast Spain's victory.

Traffic jams emerged spontaneously throughout the city as motorists took to the streets, honking their horns and waving Spain's yellow-and-red flag from windows.

Television images even showed hordes of people waving Spanish flags in Barcelona, where more than 1.1 million people protested on Saturday against a court ruling that their autonomous Catalonia region -- home to many separatists demanding a breakaway nation -- must remain a part of Spain.

The night sky of Alcorcon, a working class neighbourhood of Madrid, was lit up by fireworks and the bar patrons toasted each other with beer and sangria on a sweltering summer night, dancing in the streets and dodging firecrackers tossed by other fans.

"It's just amazing, I almost don't believe it," said a beaming Feliciano Hernandez, a 25-year-old electrician. "I'm so proud, totally happy and living for the moment and not thinking about anything else right now."

Nacho Moreno, a 23-year-old waiter, danced in the street waving the Spanish flag he had kept wrapped around his head for luck during the game as cars drove by, honking their horns in salute. He said he would probably drink until dawn to celebrate.

"It's phenomenal! Spain won. I was real nervous but I knew it was possible," Moreno said.

Police helicopters hovered over Madrid into the early hours and riot police protected major monuments.

No major incidents were reported in the first hours following the match although hundreds of thousands of people still packed the streets of major cities and towns.

However, about 700 fans in the small northern Basque town of Barakaldo had their viewing of the game interrupted midway through the second half when the electricity feed to a giant screen in the town was cut by an act of vandalism, the private Europa Press news agency said.

Meanwhile, in the Netherlands, about 100,000 fans had crammed into a central Amsterdam square to watch the game.

"I feel very sad actually for the Netherlands. It is tragic, yes," said Olivier Denboor. "I imagined until the last minute that Netherlands could win."

In The Hague, fans wept and hugged at the final whistle and tossed handfuls of orange confetti into the air.

Chris Nielen, 38, a sales manager, has lived through the Netherlands' three World Cup final defeats.

"In '74, I was in diapers. In '78, we were closer when we hit the post in the second half. Now, we have to wait another 32 years," he said.

Arend-jan Meijer tried to put on a brave face.

"It's a great shame, but Spain was the better team. It's only football," he added, as he headed for home kicking his way through piles of plastic beer cups.

At the North Sea Jazz festival, singer Stevie Wonder tried to lift Dutch spirits.

"Holland is still the winner," Wonder said after one of his songs. "We don't cry, we don't cry."

-- Associated Press Writers Al Clendenning, Harold Heckle and Guy Hedgecoe, Mike Corder in The Hague and Art Max in Rotterdam contributed to this report.