Clegg: We've taken a real knock

Deputy Prime Minister Nick Clegg admitted today that the Liberal Democrats had taken a "real knock" as voters vented their fury with the coalition's cuts on his party.

After a bruising night for the Lib Dems, analysts predicted they were on course for their worst showing since the 1980s, as they suffered a string of heavy losses in elections for English local councils and the Scottish and Welsh legislatures.

With the Lib Dems also braced for defeat when the result of the referendum on the alternative vote (AV) system is announced tonight, some activists were openly questioning Mr Clegg's leadership.

However it was a difficult night too for Labour who suffered a battering in Scotland - where the SNP was on course for an overall majority in Holyrood - while failing to make the predicted town hall gains in England.

Mr Clegg - who endured the humiliation of seeing the Lib Dems lose control to Labour in his home patch of Sheffield - insisted they would "dust ourselves down" and carry on with the work of the coalition.

But after their Conservative partners enjoyed a relatively good night, with their vote holding up well, he acknowledged that his party had borne the "brunt of the blame" for unpopular Government policies.

He said that in the North of England and in Scotland and Wales in particular there were "real anxieties" that the coalition represented a return to the era of Margaret Thatcher.

"For many families in those parts of the country especially, there are also some very strong memories of what life was like under Thatcherism in the 1980s and somehow a fear that that is what we are returning to," he said.

"What we need to do is to redouble our efforts to not only explain but show precisely one of the reasons the Liberal Democrats are in government is so that we don't go backwards as a country, but that we go forwards."

He added: "We have taken a real knock last night. But we need to get up, dust ourselves down and move on, because we have got a really big job to do."

Gary Long, leader of the Lib Dem group on Nottingham City Council where the party suffered a total wipe-out, called on Mr Clegg to step down.

"I'm in favour of the coalition but I think he's run it very badly and in my view he should resign immediately," he said.

Senior Lib Dem figures at Westminster rallied round their leader, making clear that there would be no change at the top of the party.

"The best response to today is to stick to our task, stick to our guns and deliver what we said we are going to do," said Lib Dem Treasury Chief Secretary Danny Alexander.

Nevertheless Lord Ashdown warned that there would be consequences for the coalition over the way the No to AV campaign - which was largely funded by Tory backers - was run.

There remains deep anger among Liberal Democrats at the way the campaign personally targeted Nick Clegg for taking what they see as difficult decisions in the interests of the coalition.

Lord Ashdown said that David Cameron should have distanced himself from the No campaign's tactics.

"If the Conservatives fund to a level of about 90% a No campaign whose primary task is to bring down their coalition partner ... and then stand back and say: 'Nothing to do with me guv' - I don't put that in the box marked betrayal but I put it in the box marked bloody stupidity," he said.

"And the truth is there are consequences for that."

Foreign Secretary William Hague sought to assuage the Lib Dem anger, insisting the coalition would "go on very successfully" while rejecting charges of Tory bad faith over the referendum.

"We have held the referendum that we promised to hold. We have held it on the day that we promised to hold it, so there has been no breach of faith," he said.

For Labour, shadow education secretary Andy Burnham said that the Conservatives had shown "ruthless skill" in manoeuvring their coalition partner "into the firing line".

Labour leader Ed Miliband said that the coalition partners now needed to listen to the voters who had clearly rejected the Government's strategy for tackling the deficit.

"What you have seen is voters sending a clear message to this Government and the Liberal Democrats in particular," he said.

"People have said 'This is not what we voted for at the last general election'. I think the right thing to do is to listen to what people are saying."

Mr Miliband insisted he was "pleased" with the results in England and Wales - where Labour is hoping for a majority in the Assembly - but was "disappointed" with the outcome in Scotland.

"We will have to learn our own lessons from what the public is saying to us there," he said.

Mr Hague however said that the Labour leader should be doing much better if he hoped to regain power.

"He is not doing as well as I was doing when I was leader of the opposition, which wasn't brilliantly well," Mr Hague said, referring to his ill-fated time as Conservative leader following Labour's 1997 landslide.

With a number of councils in England still to declare, and the AV referendum votes not being counted until later, Mr Clegg's day could get far worse.