Derek Beackon's victory in the east London borough's Millwall ward was seen as a protest vote and Labour candidates were confident it would not be repeated in the local elections on 5 May.
Julia Mainwaring, one of three Labour candidates in Millwall, said residents had been shocked at the BNP win.
'We have found that people who have voted Conservative or Liberal are considering a tactical vote for Labour to keep the BNP out,' she said.
Frank Dobson, Labour spokesman on London, predicted that Labour could take control of Tower Hamlets, which the Liberal Democrats have run since the mid 1980s.
'The Bengali, Irish and Vietnamese communities are not happy about what has been said and done by the Liberal Democrats,' he said.
Labour's manifesto in Millwall pledges the building of 1,000 affordable rented homes over the next four years and the creation of an agency to attract extra jobs.
The party is seeking to capitalise on widespread resentment of the huge commercial investments, such as the Canary Wharf development, which have produced few jobs for local people. Unemployment in Tower Hamlets is more than 20 per cent in several areas.Reuse content