Focus: So, when the counting is done, how do the big three stand?

Catastrophe, set-back... the worst result ever. But as they await confirmation of the blow UKIP has lined up for the Tories, the Prime Minister and his colleagues are beginning to take comfort from the details of last week's voting, writes Andy McSmith, Political Editor
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Indy Politics

Minutes after Ken Livingstone and his staff had gone back to his office on Friday evening to celebrate his re-election, he had to take his leave of them and shut himself in a side room to take a long-distance phone call. It was from Tony Blair, who had once warned that Mr Livingstone's election would prove a "disaster" for London.

This time, the Prime Minister was calling from Washington to congratulate his new and unreliable ally. The two men agreed that the Labour Party had suffered a dreadful set of election results. Both, for different reasons, agreed the explanation of Labour's humiliation was Iraq.

Yesterday Mr Livingstone put out a statement blaming the "tragic error" of Iraq for obscuring the good news about Labour's domestic record. He added, with his usual lack of false modesty - or modesty of any other description - that Londoners had voted for him because he stood for "good public services, protection of the environment and opposition to the war".

The Muslim Association of Britain holds the same view. It claims that Muslim opposition to the war added to the Liberal Democrat vote in several northern cities, as well as saving Livingstone from defeat by the Tory Steven Norris.

The same assumption explains why the Cardiff Labour MP Jon Owen Jones was relaxing in a caravan on the Pembrokeshire coast yesterday, instead of panicking or wringing his hands. Mr Jones' seat is top of the Liberal Democrat target list. He held it by only 659 votes in 2001, and last week the Lib Dems took all 20 local council seats.

Mr Jones said: "It doesn't look brilliant, but I'm holding my nerve. We would all hope that Iraq won't be a negative factor by the time of the general election, but if it is, I argued against the war in Iraq."

If Mr Blair is asked to explain Labour's setbacks when he meets Labour MPs tomorrow, or at his monthly press conference on Tuesday, he will probably say that Iraq is top of the Government's political problems.

Others, however, think that Iraq has turned into a convenient excuse for a party that has much deeper problems to address. Iraq cannot, after all, explain why Labour should gain 31 seats in the Rhondda, on the same day as it lost 24 in Newcastle upon Tyne. One observer who had been canvassing in a Labour heartland, where Labour was give a serious mauling by the Liberal Democrats, said: "Iraq was no more than one issue, which came up third or fourth behind crime and anti-social behaviour."

Political strategists at Conservative Central Office think that Labour may now be caught in the kind of fatal pincer movement that destroyed John Major's government. It is undoubtedly true that - like the Tories under Major - Labour is haemorrhaging councillors. In 1996, there were 11,000 Labour councillors. After last week's results, they are down to just over half that number. Since councillors tend to be the most active members of their local parties, these losses must be having a serious impact on Labour's grassroots organisation.

The other parallel with the 1990s, the Tories claim, is that people now vote for whichever party has the best chance of beating Labour, which means the Liberal Democrats in the northern cities and the Tories in the South.

Blairite loyalists say that Labour's predicament is nowhere near that bad, because although last week's results were dire for Labour, they were not very good for the Conservatives. "The results were bad, but they were not meltdown," Tessa Jowell, the Secretary of State for Culture, said yesterday. "They are said to be our worst result since 1968 - well in 1968, the Tories had 60 per cent of the vote; now they're on 38 per cent."

They also claim the campaign enabled them to get a team working together on a daily basis, in a dry run for a general election campaign. It consisted of John Prescott, Gordon Brown, party chairman Ian McCartney, Cabinet Office minister Douglas Alexander and senior staff from Downing Street and party headquarters.

The former cabinet minister Peter Mandelson was a less frequent participant in these campaign meetings, and has been doing some groundwork for the Government's next test, the impending by-election in Leicester South.

As often happens with Mr Mandelson, even this relatively low-key involvement has set off ripples of speculation about what exactly he is doing. At least one observer thought he was there to undermine the Prime Minister's new press secretary, David Hill.

Mr Hill - a far less flamboyant figure than Alastair Campbell, whom he replaced - is popular in the Labour Party. A close colleague said he was "relaxed" about Mr Mandelson's involvement.

Members of the Blair circle were angry with the BBC yesterday - not for the first time - for reporting that Thursday's results were the worst ever for any ruling party. This is true in the sense that Labour was pushed into third place, which has not happened to a governing party before. But Labour lost fewer than 500 seats, with the gains divided by several parties, whereas in 1995, the Conservatives lost about 2,000 seats, all but about 200 of which went to Labour.

In Birmingham - where the count in one ward will be completed today - Labour has kept control in what used to be a Tory city, despite six campaigning visits from Michael Howard, who launched his local government campaign there. Out of their 232 council seats gained, 19 are on just three councils - Brentwood, Wokingham and Worthing - where the local MPs are sitting Tories with comfortable majorities.

While Liberal Democrat party workers sailed up into a state of euphoria after their big, symbolic victory on Tyneside, they also had poor results in some places where they usually do well, such as Cheltenham and Eastbourne. When the European election results come out tonight, the Lib Dems will probably be consigned to fourth place.

Nigel Farage, the leading MEP for the UK Independence Party, took a break yesterday to go fishing on the south coast, and landed a 5lb bass, completing a run of luck which started when Robert Kilroy-Silk agreed to enliven the election by running as a UKIP candidate in West Midlands.

His little party is the only one with unqualified cause to celebrate last week. Its sudden rise is likely to dominate the political news when the European election results announced.

Labour MPs have watched UKIP's rise with mixed feelings. They like the way the party has taken votes off the Tories, but with a referendum on the European constitution likely to happen next year, the rise of an overtly anti-EU single-issue party is causing anxiety.

Mr Farage denied that all UKIP had done was eat into the Tory vote. "Okay, we damaged the Tories. We damaged them psychologically more than anything else, but when you count the Labour voters or Liberal Democrats or people who weren't going to vote at all who voted UKIP, they outnumber the former Tory voters. Our canvassers had people saying they hadn't voted for 10 years but were voting for us."