Brian Jenkins, the leader of the local council, scored a swing to Labour in line with the national opinion polls to take the seat from the Tories and cut John Major's Commons majority to one.
Tony Blair, the Labour leader, underlined the importance he attached to a convincing win with three visits to the constituency, including one on Tuesday on the eve of his trip to the United States.
For the Government, the vote is the latest in an unbroken string of defeats stretching over six years. The scale of Labour's victory will increase Tory alarm that time is running out for the Government, with a general election at most 13 months away.
Roger Freeman, the public services minister, said: "This is a by-election and we know they are a scant test of people's opinions in how they would vote at a general election."
Conservative party sources had been trying to play down expectations in the past week, but Kenneth Clarke, the Chancellor, last week predicted Tory candidate Jimmy James would benefit from tax cuts and steady economic growth.
The Liberal Democrats fought a low-key campaign, prompting Tory charges of collaboration with Labour. Nick Harvey, the Liberal Democrat MP, said: "What this does show yet again if any further evidence was needed is that the public are heartily fed up with the Conservatives and are going to vote howsoever is the best way to get rid of them."
The by-election was caused by the death of former Tory whip Sir David Lightbown in December.
B Jenkins (Lab) 26,155
J James (C) 12,393
J Davy (Lib Dem) 2,042
A Smith (UK Ind) 1,272
Lab majority 13,762
Swing C to Lab: 22%
1992 result: D Lightbown (C) 29,180; B Jenkins (Lab) 21,988; N Penlington (Lib Dem) 5,540. C maj: 7,192.Reuse content