Under the current forecast, the party has won 232 seats, down 26 compared to 2010, due a loss of 40 seats in Scotland to the SNP.
Other high-profile losses included the shadow foreign secretary Douglas Alexander, shadow Scottish secretary Margaret Curran, and Tom Harris, a transport minister in the last Labour government.
The party won 30.4% of the national vote, compared to 36.8% for the Conservatives, who are set to form a majority government.
Speaking in Doncaster, where he retained his seat, Labour leader Ed Miliband said it had been ‘a very disappointing and difficult night’ for the party.
‘We haven't made the gains we wanted in England and Wales and in Scotland we have seen a surge of nationalism overwhelming our party.’
The BBC is reporting that Miliband is preparing a resignation statement for later today.
Following his loss, Balls said he felt a sense of sorrow and concern for the future.
‘We will now face five years where questions will arise about the future of our union, about whether we can stay as a member of the European Union and fight for jobs and investment, whether we can make sure we secure our National Health Service at a time when public spending is cut.
‘Those are real concerns to me and to many people across the United Kingdom.’
Balls lost his Morley and Outwood seat on the outskirts of Leeds by 422 votes to Conservative candidate Andrea Jenkyns.
