Yahya Jammeh had declared The Gambia would become an Islamic nation if he won despite 18 per cent of the population being Christian.
He had threatened to close down all faith schools and reopen them as Muslim schools.
The Catholic Church told Premier the unexpected win of opposition candidate Adama Barrow was an answer to prayer.
"For many Christians, this is like a heavy load that is lifted from our heads," said Fr Peter Lopev from the Diocese of Banjul.
He said: "We were afraid that, if he had won, we were going to lose our rights and become second class citizens.
"We're extremely relieved. We prayed for God to intervene and today God answered our prayers.
"We left everything into the hands of our Lord and Saviour Jesus Christ. We cried and the Lord heard our cry.
"We have a God who answers prayers."
He added that all churches in The Gambia would hold a thanksgiving Mass on Sunday.
Electoral commission chairman Alieu Momarr Njai said Mr Barrow received 263,515 votes, Mr Jammeh won 212,099 and a third candidate, Mama Kandeh, received 102,969.
There was no immediate comment from the president, who had claimed his victory was all but assured by Allah.
Since coming to power in 1994, he has won a series of elections that were denounced by critics as rigged.
He is accused by rights groups of ordering the deaths of his political opponents and his regime has also targeted journalists, and gays and lesbians.
The announcement came a day after eight opposition parties united behind a single candidate - former businessman Mr Barrow - to try to oust Mr Jammeh at the polls.
After voting on Thursday, Mr Jammeh had predicted "the biggest landslide in the history of the country".
Mr Barrow said on voting day that he strongly believed Gambians were ready for change, adding: "He is not going to be re-elected - his era is finished."
Fr Peter Lopev speaking to Antony Bushfield:
