Miliband keeps the champagne on ice as PM faces wrath of Tory right

Conservative leadership accused of pulling punches to protect Clegg as Labour claims result is first step towards rebuilding

David Cameron faced the fury of the Tory Right as it blamed his "half-hearted" campaign for the collapse in the party's vote in the Oldham East and Saddleworth by-election.

They accused the Conservative leadership of pulling its punches in an effort to shore up support for the Liberal Democrats.

Labour's Debbie Abrahams secured a comfortable victory in the Coalition's first major test, winning the seat with a majority of 3,558 over the Liberal Democrat Elwyn Watkins. Ed Miliband, the Labour leader, will today call for the party to use it as a springboard to rebuild itself as "the standard-bearer of the progressive majority".

Nick Clegg was relieved that the predicted haemorrhage of support for the Liberal Democrats, who have hit single figures in national polls, failed to materialise. Instead it was the Tory share of the vote that collapsed by more than half, triggering right-wing protests over Mr Cameron's softly-softly approach to his coalition partners.

The Prime Minister is facing growing attacks from restless backbenchers – 27 of whom rebelled against the party whip over Europe this week – complaining that he is conceding too much influence to Mr Clegg's party. Some even fear Mr Cameron is considering a Con-Lib Dem electoral pact at the next general election.

The former party chairman Lord Tebbit described the Oldham East performance as "dreadful" and added: "Mr Cameron may be pleased that his decision to run a half-hearted campaign and offer good wishes to their candidate helped save the Liberals, but Conservatives will be downcast.

"The Liberals fought an excellent campaign and with the help of Mr Cameron they avoided total disaster." He claimed that the Tory tactics had played into the hands of the UK Independence Party, who came fourth with more than 2,000 votes.

The MP Douglas Carswell protested that the Tory candidate, Kashif Ali, had been "let down" by the leadership. "It is usually a good idea if you want to do well as a party to make it clear that you are serious about trying to win. We have paid the price on the doorstep and our leaders should reflect on that," he said.

Bernard Jenkin, the MP for North Essex, said: "The Conservative candidate did well, considering there was such ambivalence from the leadership about whether they wanted to the Conservative Party to do well."

Frustration among Mr Cameron's allies over the continued sniping from party critics was laid bare by the Tory chairman, Baroness Warsi, who denied running a token campaign in the by-election. She added: "As far as the right-wing of our party are concerned, I would say this to them: We had many, many MPs turning up. We had some who made much comment about the fact that we weren't fighting a strong enough campaign but, interestingly, didn't turn up to campaign."

The contest was called after Phil Woolas, who won the seat last year by a margin of 103, was found guilty of lying about his Liberal Democrat opponent in the general election. Both Labour and the Liberal Democrats poured huge efforts into the campaigning in the Greater Manchester seat, and both drew comfort from their vote holding up.

Mr Miliband's position was bolstered by the result after criticism that he had failed to make more of an early impact as leader.

He will tell a Fabian Society conference in London today that it was a clear rejection of coalition policies. He is due to say: "Forgive me if I decline to join those of you gloating at the expense of the Liberal Democrats.

"Their decision to join a Conservative-led government was a tragic mistake, and I hope they come to see that in time. Labour over the next four years must become again the standard bearer of the progressive majority."