Blair pins hopes on Brown to win back support spending pledges win back to respond to 'wake-up call'

The elections delivered a stark warning to Labour and with it the party's worst showing since 1992.

It is now all the more likely that Gordon Brown, the Chancellor, will give a substantial increase to the state pension in the autumn to repair the damage caused by the 'derisory' rise of 75p this year.

Yesterday Tony Blair said that the Government would listen to the "wake-up call" by Labour's core voters. Repeating the party's low-key election slogan, he said: "I am the first to admit that though we have achieved a lot there is still a lot more to do... I want them [voters] to know that we understand that and we respond to that."

Mr Blair is now counting on the Chancellor winning back Labour's disenchanted voters by increasing spending on key public services including transport and education in July when he unveils the results of his comprehensive spending review.

The Government is braced for a backlash next week from Labour MPs whose marginal seats could now be put at risk if Mr Blair opts for an early election next spring. The local election results may indeed cause Mr Blair to delay the election, unless Mr Brown can rekindle the "feelgood factor".

However, party strategists have advised the Prime Minister to resist any move to change strategy by narrowing its appeal to the Labour "heartlands". Mr Blair is confident of the support of most of the Cabinet for continuing with a broad appeal including the middle classes.

"Gordon has given the answer - the heartland is a Tory trap. The Tories want us to retrench and you cannot win enough seats to win a general election if you just focus on the heartland vote," said a Labour party source. "Clearly there's been a backlash on the back of Rover, and we're working to save as many jobs as we can. But it's not a situation where you can throw money at problems. We believe that New Labour, a modern, moderate party, is the right response."

One minister said: "Peter Kilfoyle [the Labour MP for Liverpool Walton] resigned from the Government to protect his heartland vote but it has not changed anything - the Liberal Democrats still have control of Liverpool."

Mr Blair will be urged by ministers to step up the campaigning in the country to win Labour's core vote back to the fold. Traditionalists in the Cabinet believe the Blairites have relied too much on spin doctoring and not enough on delivery to shore up the Labour support. There will be no Cabinet split, however.

The Deputy Prime Minister John Prescott is expected to launch a counter-attack on the Government's critics with a defence of Labour's performance in the local elections in which Labour held on to "new" Labour councils in Gloucester, Exeter, Blackpool and Trafford.

The leadership is keen to avoid damaging recriminations between Downing Street and Millbank, the party headquarters, over the conduct of its campaigns for the local elections and the Mayoral contest. Party sources said the tensions would be kept under wraps. "You won't see or hear recriminations between Number 10 and Millbank. If we have ideas, we have to run them past Number 10 first. Clearly Number 10 wants us to be happy with the way things go," one said.

Tensions have been reported between Margaret McDonagh, party general secretary, and the political secretary at Number 10, Sally Morgan, in charge of political relations with the party. Downing Street was accused of being "heavy handed" in its efforts to stop Ken Livingstone becoming Labour's candidate, and the subsequent rubbishing of Mr Livingstone which backfired on Labour.

The selection process for future mayoral candidates will be changed, probably to a one member, one vote ballot of the membership to avoid any repeat of the allegations of the result being rigged.