According to early projections, Mr Schroder's party lost control of at least one of the two regional assemblies up for grabs in yesterday's poll, and was running neck and neck with the Christian Democrats in the second.
The winners of the day were clearly the DVU, a party without any membership to speak of, bankrolled by the right-wing publisher Gerhard Frey who had spent 2.5million German marks (pounds 870,000) to flood the eastern Land of Brandenburg which surrounds Berlin with xenophobic leaflets and posters. His investment was rewarded with a 5.7 per cent share of the vote, which gives him a new foothold in the fragile parliamentary democracy in the east, after a whopping 13 per cent gained in Saxony-Anhalt last year.
Mr Frey's latest success, if anything, conceals the depth of sympathy for his cause. Nearly 40 per cent of Brandenburgers polled thought the DVU had a "convincing policy on foreigners"; some 15 per cent believed the DVU deserved to be represented in their parliament.
The Social Democrats, who had governed alone in the state capital, Potsdam, for the past five years, saw their support drop by 15 points and now face the awkward choice of forming a coalition with either the Christian Democrats or the ex-communist Party of Democratic Socialism, who had increased their tally from 18 per cent of the vote to 24 per cent, just two points behind the resurgent Christian Democrats.
Mr Schroder's party also suffered reverses in Saarland, the home state of Oscar Lafontaine. According to exit polls, the Social Democrats, led locally by Reinhard Klimmt, a close Lafontaine ally, were lagging behind the Christian Democrats by half a per cent. Saarland had been governed since 1985 by the Social Democrats. Its loss would be nothing less than catastrophic for the party. Local issues, for once, had little bearing on the outcome. The leaders of both Lander sought to distance themselves from Mr Sch-roder's unpopular federal government.
Polls in Brandenburg had shown that 80 per cent of voters were satisfied with their regional administration and blamed the central government for soaring unemployment, which stands at 18 per cent. Saarland's opposition to Chancellor Schroder was well known to all voters, yet many Social Democrats refused to cast their votes for a party deeply divided.