Turkey's top election body ordered a re-run of Istanbul's mayoral election on Monday after the party of President Recep Tayyip Erdogan complained about its shock defeat in the vote, the state news agency reported.

The winner of the election, Ekrem Imamoglu of the main opposition Republican People's Party (CHP), said it was a "treacherous decision" and vowed to fight on.

The new election will take place on June 23, according to the state-run TRT broadcaster.

"They are trying to take back the election we won. Maybe you are upset but never lose your hope," he told thousands of supporters on the outskirts of Istanbul following the ruling.

Imamoglu narrowly defeated the candidate of the ruling Justice and Development Party (AKP) in the March 31, local elections to take control of Turkey's biggest city.

It was a rare electoral defeat for Erdogan, himself a former mayor of the city, which has been in the hands of the AKP and its predecessors for 25 years.

But the AKP has refused to accept defeat, saying there were "irregularities and corruption" in the vote.

Imamoglu won by just 13,000 votes but was confirmed after two weeks of recounts in April.

The soft-spoken former district mayor had vowed to heal political divisions and reach across party lines.

But Istanbul, with 16 million residents, is Turkey's economic engine and controls a major chunk of public spending. Erdogan once said winning Istanbul was like winning the entire country.

The loss of the mayorship in Istanbul, along with a more resounding defeat in the capital Ankara, reflected widespread concern over the deteriorating economy.

'Downright dictatorship'

The CHP, which had previously called Erdogan a "bad loser", said it was holding an emergency meeting after the election body's announcement.

The party's deputy chair, Onursal Adiguzel, who represents Istanbul in the national assembly, said the ruling was "neither democratic nor legitimate".

"Going to the polls against the AKP is allowed, but winning is forbidden... This is downright dictatorship," he tweeted.

Imamoglu said he would travel to Ankara on Tuesday to meet with party leaders.

"I dont even know what to say. The lawlessness is so obvious," a female supporter told AFP ahead of his speech in Istanbul.

"If there is no rule of law... they will trigger a civil war."

The defeated mayoral candidate, former prime minister Binali Yildirim, said he hoped the re-run would "be beneficial for our city".

Erdogan presented the local elections as a matter of national survival, campaigning heavily even though he was not running himself.

For his supporters, Erdogan remains the strong leader that Turkey needs as it faces internal and international security threats — while also speaking for religiously conservative Turks who have felt sidelined.

His critics say he has undermined the rule of law with a sweeping crackdown on dissent and sewn division by portraying his opponents as enemies of the state.

The AKP still won the most seats nationwide in the local elections, but it has been damaged by Turkey's first recession in a decade, as well as record-high inflation and a currency that has lost more than 12 per cent of its value against the dollar this year alone.

The party did not request a re-run of the election for the Istanbul local assembly, in which it won a majority of seats.