The pressure on Gordon Brown to stand down intensified last night as the Labour vote went into meltdown in the European elections.
Labour won the lowest share of the vote in a nationwide election in its history, as support in its traditional heartlands collapsed following the scandal over MPs' expenses. In Yorkshire and the Humber, it suffered the humiliation of losing a seat to the far-right British National Party, which won its first seat in a nationwide election.
In Wales, Labour failed to top the poll for the first time since 1918; the Tories came first and Ukip gained a seat from Labour. In the North East, Labour's share of the vote dropped from 34 to 25 per cent. In Scotland, Labour was pushed into second place by the Scottish National Party.
The Labour vote appeared to free fall in the South East and South West, where in some areas the party plummeted to fifth. In London, Labour's vote dropped by four percentage points.
Labour officials admitted the party could finish third nationwide behind Ukip and the Tories. Labour was on course to win about 16 per cent of the vote, the lowest since it began fighting elections as an independent party in 1918.
A BBC projection early today forecast that the Tories would win 27 per cent of votes, Ukip 17 per cent, Labour 16 per cent, the Liberal Democrats 14 per cent, the Greens 9 per cent and the BNP 6 per cent. Labour's crushing defeat could prove a tipping point for many Labour MPs as they gather in Westminster today to decide Mr Brown's fate.
Many will calculate that they would lose their seats if last night's results were repeated at the general election. They left the Prime Minister on a knife edge as he prepares for a showdown at a critical meeting of the Parliamentary Labour Party.
Harriet Harman, Labour's deputy leader, admitted the results were "very dismal" but insisted they were not Mr Brown's fault. "Our supporters are absolutely furious with us about expenses," she said. "They expect us to have higher standards than the Tories."
Nick Brown, the Government's chief whip, challenged rebel MPs to put up or shut up: "The time has come for them to nominate their candidate, see if they've got sufficient nominations and take the issue to a party conference. If they can't do that, they should get behind the leadership that the overwhelming majority of party members support."
Mr Brown is preparing key concessions to Labour MPs in an attempt to hang on to his job. The Independent has learnt that controversial plans to part-privatise the Royal Mail may be shelved on commercial grounds.
Although the Government would remain committed to selling a 30 per cent stake, it may delay the move to maximise the likely return for the taxpayer. Ministers believe more bidders would emerge when the recession is over. So far, only one firm offer has been tabled, by the private equity group CVC.
The delay would be welcomed by many Labour MPs, 149 of whom have signed a Commons motion opposing the sell-off. And within days, Mr Brown will announce a formal inquiry into the Iraq war and its aftermath, a move that would be welcomed by Labour critics of the 2003 invasion.
He has asked Sir Gus O'Donnell, the Cabinet Secretary, to advise him on the scope and timing of an investigation and the possible membership of the inquiry team. Aides said the Prime Minister had always favoured the move but wanted to wait until the bulk of British troops had withdrawn from Iraq.
Despite the planned concessions, rebel Labour MPs warned they would step up their campaign to unseat Mr Brown. The Prime Minister will try to rally support at the make-or-break meeting of the Parliamentary Labour Party (PLP) tonight.
Although the new-look Cabinet remained firm in its support of Mr Brown yesterday, his critics hope a backbench rebellion – "the peasants' revolt" – could persuade senior ministers he must go. "If 100 MPs say it's all over, he will have lost the confidence of the PLP," one former Cabinet minister said last night.
But Lord Mandelson, the Business Secretary and unofficial deputy prime minister, played down the impact of the hammering for Labour. He told the plotters they could not blame the results on Mr Brown, saying the attacks on his leadership and the MPs' expenses affair were responsible. He told The Independent: "People cannot spend days destabilising the Government and criticising the Prime Minister and then demand good results."
A Labour spokeswoman insisted the party's performance could not be translated into a general election result: "People are angry about expenses and as the party of government we have borne the brunt of that."
Yesterday Mr Brown admitted he faced "testing times" but said Labour could not turn in on itself and away from the serious challenges facing the nation. He was given a show of loyalty by Labour activists in East London after warning that the public would not understand if the Government gave up at a time when it faced the problems of tackling the recession and cleaning up Parliament. "What would they think of us if ever we walked away from them at a time of need? We are sticking with them," he said. "We have a purpose, we have a mission, we have a task ahead. We are going to get on with that task of building a better Britain."
Close allies believe the Prime Minister can see off his critics because of the Cabinet-level support and a recognition among backbenchers that a change of leader would need to be followed by an early general election in which many of them would lose their seats.
But Lord Falconer of Thoroton, the former Lord Chancellor and a close friend of Tony Blair called for an "urgent debate" on Mr Brown's leadership, telling the BBC: "We need unity above all. Can we get unity under the current leadership? I am not sure we can and we need to debate it urgently and I think probably it will need a change in leader."
His intervention fuelled claims by left-wingers that Blairites were plotting against Mr Brown.
Dissident Labour MPs promised to press ahead with their plans to publish a round-robin letter demanding his departure after the PLP meeting.
Mr Brown and Labour whips aimed a telephone campaign at wavering backbenchers over the weekend, offering a range of threats and inducements.
Labour milestone: Worst result ever
As it slumped to its worst performance since the modern party was formed in 1918, last night Labour failed to top the poll in Wales for the first time after an unbroken 91 years of dominance. Factions of the Liberal Party representing the interests of the working classes broke away in 1893 to form the Independent Labour Party, which held together an association of socialist MPs. The parliamentary group took the Labour Party name in 1906, electing Kier Hardie as leader. It adopted individual membership 12 years later.
Brickbats and bouquets: Voices from the party
*Nick Raynsford, former minister: "We have seen over the last week a whole series of events all indicating the profound unhappiness of very many MPs ... If we don't take the right decision now that mood of unhappiness will continue. We will have a long lingering downward decline towards ... almost inevitable electoral defeat next year. That would be disastrous."
*First Secretary Lord Mandelson:
"Stop taking shots at the Prime Minister ...
If we get the policy agenda right, and if it's sufficiently bold and decisive, then the public will take a different look at us."
*Alan Johnson, the new Home Secretary:
"I think Gordon Brown is the best man for the job. You are never going to get a politician that is absolutely perfect in every respect, Tony Blair wasn't, none of his predecessors have been."
*Cabinet Office minister Tessa Jowell: "Gordon Brown loves the Labour Party. He is Labour through and through. The team has got to rally round Gordon and build the strength that the evidence of a team and a government working together can do."