HARARE, March 30 (Reuters) - Zimbabwe's opposition claimed victory on Sunday based on early results from an election in which it is trying to unseat President Robert Mugabe after 28 years of power and end an economic collapse.

"It's a historic moment for all of us. We have won this election, we have won this election," Tendai Biti, secretary general of the main opposition Movemement for Democratic Change (MDC), told reporters, diplomats and observers at a briefing.

The opposition, headed by former trade unionist Morgan Tsvangirai, has accused 84-year-old Mugabe of employing election-rigging tactics in an attempt to stay in power and African observers say they detected fraud in Saturday's ballot.

Once-prosperous Zimbabwe is suffering from the world's highest inflation rate of more than 100,000 percent, chronic shortages of food and fuel and a rampant HIV/AIDS epidemic that has contributed to a steep decline in life expectancy.

"People are dying in hospitals and funeral expenses are very high. How do you expect us to survive? Shop shelves are empty," said mother-of-three Gertrude Muzanenhamo, 36, echoing the views of many voters interviewed by reporters.

Mugabe, who accuses the West of sabotaging Zimbabwe's economy, expressed confidence on Saturday he would be returned to office. "We will succeed. We will conquer," he said.

The former guerrilla leader, in power since independence from Britain in 1980, rejected the vote-rigging allegations.

Biti said the MDC's election agents had reported that early results posted at polling stations showed Tsvangirai was projected to win 66 percent of the vote in the capital Harare, an opposition stronghold.

SIGNIFICANT INROADS

He said Tsvangirai had made significant inroads in Mugabe's rural strongholds by leading in the southern province of Masvingo and Mashonaland Central Province, north of Harare, where the MDC has not won a parliamentary seat since 2000.

Tsvangirai's winning trend had also extended to Mugabe's home province of Mashonaland West, where the MDC had taken a rural parliamentary seat, said Biti.

He said that in Zimbabwe's second city of Bulawayo, another opposition power base, Tsvangirai had a slight edge over former Finance Minister and ruling ZANU-PF official Simba Makoni -- also standing against Mugabe.

But Makoni, whose decision to run was seen by many analysts as a sign of increasing unease in ZANU-PF ranks, was leading in Zimbabwe's southwestern Matabeleland South Province.

The Zimbabwe Electoral Commission said it would start to announce official results later on Sunday. Final results are not expected for several days from the presidential, parliamentary and local polls.

Observers from the Pan-African parliament said in a letter to the commission they had found more than 8,000 non-existent voters registered on empty land in a Harare constituency.

Most international observers were banned and a team from the regional grouping, the Southern African Development Community (SADC), did not comment on Saturday. Critics say the SADC, which has tried to mediate over Zimbabwe, is too soft on Mugabe.

The powerful heads of the security forces have backed Mugabe, and voters said they had seen patrolling police and army units with armoured vehicles and water cannon.

Some security chiefs say they will not accept a Tsvangirai victory but the opposition leader told reporters: "I am not seeking the security chiefs mandate but the people's mandate."

If no candidate wins more than 51 percent of the vote, the election will go into a second round.