Tony Blair's hopes of hanging on to power received a setback today as Labour suffered losses in the local authority elections.
Mr Blair will carry out a swift Cabinet reshuffle in an attempt to show that his Government has not run out of steam after a disappointing performance by Labour in the council elections in England held yesterday.
At 2am, the Tories claimed they were on course to win 40 per cent of the votes, putting them on track for winning the next general election. Labour lost control in Derby, Bury, Newcastle-under-Lyme, Stoke-on-Trent and Warrington, and the Tories gained Crawley, Bassetlaw, Chorley, Hastings and Coventry.
Labour was braced for a drubbing in the key battleground of London. The Tories claimed victory in Hammersmith and Fulham, a flagship Labour authority, for the first time since 1968, and Croydon. After results from about half the 176 authorities where elections were held, the Tories had 111 more councillors, while Labour had lost 97 and the Liberal Democrats were down two.
Eric Pickles, the Tories' deputy chairman, said: "We are having a better night than anyone predicted. Labour are approaching their worst scenario: losing councils in their very heartlands. We are the main beneficiary."
But Labour and the Liberal Democrats claimed the Tories were making no progress in the major northern cities, saying they needed to do so to show that they were an alternative government.
The British National Party was on course to win a record number of councillors after taking seats in Stoke-on-Trent, Epping Forest, Sandwell, Pendle and Redditch.
Cabinet ministers apologised to Labour councillors who had lost their seats, admitting that their record locally had been overshadowed by the turmoil in the Government over the release of foreign prisoners, NHS job cuts and the revelation that John Prescott had a two-year affair with his diary secretary, Tracey Temple.
The Culture Secretary, Tessa Jowell, who headed Labour's campaign in London, told Sky News: "The headlines of the last two weeks have created a great problem for us and created a noise which has made it very difficult for the message of our local candidates to get through. I am very sorry if local activists feel that they have been let down."
Mr Blair will try to go on the offensive by freshening up his senior ministerial team and dismissing calls by allies of Gordon Brown for him to announce his departure timetable from Downing Street. He will also shrug off demands by left-wing MPs for him to "go now". His critics may draw up a round-robin letter urging him to quit.
Nick Brown, a close ally of Mr Brown and Labour's former chief whip, cast doubt on Mr Blair's ability to restore the party's fortunes. "We can't drift on," he said. "We have got to listen to people. People who supported us in 1997, who were enthusiastic about us, are not voting for us and are very unhappy," he said.
The reshuffle was originally planned for Monday, but last night ministers were put on standby for a shake-up today. No 10 fears that another weekend of bad headlines could further undermine the Prime Minister's authority. The Tories said such an early reshuffle would smack of "panic."
Under Mr Blair's fightback strategy, Mr Prescott is due to give a live BBC television interview on Sunday in his first public response to the revelation that he had a two-year affair with Ms Temple. He is expected to accept his share of the blame for Labour's poor election results.
Mr Blair will then try to switch the focus on to policy by holding his monthly press conference on Monday only two weeks after his last one.
Although Mr Blair's critics claimed the poor council results proved he is an electoral liability, one loyalist minister said last night: "He still has a lot of fire in his belly and he will show that. There is a lot more he wants to achieve."
Reports from grassroots Labour activists to party headquarters said the Prescott affair had provoked a backlash among women voters. They said the release of the prisoners without being considered for deportation had scuppered the party's attempt to campaign on being "tough" on anti-social behaviour.
Allies said Mr Blair wants Charles Clarke, the Home Secretary, Patricia Hewitt, the Health Secretary, and Mr Prescott to remain in their posts, but some Labour MPs are pressing for some or all of the three ministers to be moved.
Cabinet ministers tipped for promotion include John Hutton, the Work and Pensions Secretary; Hilary Benn, the International Development Secretary; Alan Johnson, the Trade and Industry Secretary and David Miliband, the Communities Minister.
Hazel Blears, the Home Office minister, who narrowly missed out on promotion to the Cabinet after last year's general election, is expected to join the top table this time. Junior ministers likely to move up include Liam Byrne at Health and Jim Murphy at the Cabinet Office. Two backbench allies of Gordon Brown Ed Balls and Ed Miliband may become ministers.
Mr Blair is said to have a departure date in mind but is determined not to provoke another flurry of speculation about his exit by making his intentions public.
Mr Blair's efforts to remain in office were dealt a blow when an ICM survey for the BBC showed that half of voters want him to stand down by the end of this year.
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Mr and Mrs Prescott emerge to vote... but his mistress faces the sack
John Prescott was given a show of support by his wife, Pauline, at their first public appearance together since the revelations about his affair with his Whitehall diary secretary, Tracey Temple.
The Deputy Prime Minister and his wife held hands fleetingly as they entered the polling station to vote in local elections in Hull, near Mr Prescott's constituency home.
Ms Temple, 43, may face the sack for selling her story to a newspaper and thereby breaking the Civil Service code which states that employees should retain the confidence of ministers served.
Mr Prescott is planning to use an interview with Andrew Marr on BBC television on Sunday to take the blame for the affair and deflect some of the criticism over Labour's defeat in yesterday's local elections from Tony Blair.
"John is going to accept that he has been very stupid and will take his share of the blame for the way that has damaged Labour support," said a close ally. "He is going to accept that he has caused a lot of pain both to his family and the party."
Mr Prescott agreed to appear on the programme before his affair was reported. Ms Temple has given a graphic account of the affair, and more extracts from her diary will be published on Sunday. They do not contain damaging remarks by Mr Prescott about cabinet colleagues.
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