Blatter had missed out on the required two-thirds majority in the first ballot - receiving 133 votes to his rival's 73 - but Prince Ali then took to the stage to withdraw before a second round could begin.
Delegates at the 65th Fifa Congress in Zurich opted for Blatter despite the widespread controversy that engulfed the event this week.
Seven Fifa officials, including vice-president Jeffrey Webb, were arrested at dawn by Swiss authorities on request of the US Justice Department on Wednesday and are facing extradition to the United States on money laundering, racketeering and wire fraud charges.
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