It reduced the Government's majority to 18, but its effect on party morale was immediate and damaging. His former colleagues stood around the members' lobby at the Commons in stunned groups, hardly believing the reports.
News of Mr Milligan's death broke as Mr Major prepared to leave Downing Street for the Conservatives Winter Ball, a highlight of the party's social calendar.
It would have affected him personally, as Mr Milligan was a loyal Majorite and praised the Prime Minister's 'courtesy and plain speaking' in his maiden speech in the Commons.
Mr Major had included Mr Milligan's Eastleigh seat in his 1992 election campaign, and was hit by an egg when he visited a supermarket to support Mr Milligan. A former BBC journalist and staunch supporter of the Maastricht treaty, he was used to defend the Government in difficult interviews.
He was particularly adept on the Newsnight programme, on which he appeared defending the Government only last week.
His death could not have come at a worse moment for Mr Major. He had reasserted his authority over the party with a rousing speech to the 1922 Committee last Thursday, and yesterday had sought to demonstrate a firmer style of leadership over Bosnia with the renewed threat of air strikes.
Some of his loyal senior backbenchers had said the tougher line on Bosnia would be good for party morale. 'It will lift us 10 points in the polls,' predicted one senior knight of the shires.
The optimism was tempered by the prospect of defeats in the May local elections and the June European elections. But the speculation about the leadership had receded and Mr Major's critics on the backbench had been silenced for the time being.
The party was climbing out of the hole into which it had fallen in January. Whatever the circumstances surrounding Mr Milligan's death, it depressed morale again last night at Westminster.
The sympathy felt for Mr Milligan - a well-liked and highly rated MP - and his family, was mixed with gloomy reflections on Mr Major. Once more, he was made to look like a leader dogged by bad luck. Tories have been reminded in recent weeks of Napoleon's question about officers: 'Is he lucky?'
Tory MPs could hardly believe the series of disasters which befell the party when they returned from their New Year break, with the disclosures of Tim Yeo's 'love child' and the admission by a Tory MP that he had shared a bed with another man to save money on a trip to France. There was an attempt to 'out' homosexuals in the Government, which was condemned by all sides in the Commons.
Allegations of Tory sleaze became a key part of the Labour campaign for the local and European elections, and opinion polls have shown that the tactic seems to be working.
The by-election will give Labour a tough test. The Liberal Democrats, who won both the Newbury and Christchurch by-elections in safe Tory seats, came second in Eastleigh in 1992. They will be favourites to take it this time.
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