Labour took a beating from voters across Britain in the final electoral test of Tony Blair's career as Prime Minister.

While avoiding the meltdown some had been predicting, the party lost hundreds of councillors, was overtaken by Nationalists in the Scottish Parliament and saw its Welsh Assembly representation shrink.

Tory leader David Cameron hailed "a real breakthrough" for the Tories, whose gains sailed past 800 council seats yesterday afternoon, including in northern areas.

But Labour officials insisted last night that the Tories had "flatlined", as the BBC revised their projected vote share down to 40 per cent, the same as last year's elections.

Labour's vote share has apparently increased to 27 per cent, up one point on last year, while the Liberal Democrats were down a point to 26 per cent.

The Prime Minister said the results provided "a perfectly good springboard" for Labour to win the next General Election, expected in 2009 or 2010.

Gordon Brown, who is expected to take over as Prime Minister this summer, said he would "listen and learn".

The elections were marred by delays because of new systems and technical glitches, prompting the Electoral Commission to launch an inquiry into voting chaos in Scotland.

Confusing ballot papers were blamed for as many as 100,000 invalid votes in elections to the Scottish Parliament and councils north of the border.

New electronic equipment for vote-counting also gave rise to concerns as counts in England and Scotland suffered delays due to technical difficulties.

In Scotland, the Scottish National Party became the biggest party in Holyrood for the first time, winning 47 seats to Labour's 46.

SNP leader Alex Salmond will now try to form a coalition executive, because 65 seats is required for an overall majority.

Current First Minister Jack McConnell pledged to keep all options open and not to rush into any hasty coalitions.

Labour remained the biggest party on the Welsh Assembly, but leader Rhodri Morgan said the party - which has been in charge of a minority administration - would now have to find a coalition partner after losing three seats.

Labour's projected losses of seats in English councils were likely to fall short of the 650-750 predicted by some observers.

With results in from 324 councils, the Tories had won 856 new seats and taken control of another 38 councils.

Labour were down 465 councillors, losing control of eight councils. The Lib Dems lost 243 councillors, while five town halls left their grasp.

Mr Cameron said: "We are now the party of the whole country, winning in every part of the country, winning against Labour, winning against the Liberal Democrats."

But Mr Blair said it had been a dreadful set of results for the Liberal Democrats and the Tories "have not broken through" in the way they wanted.

He said: "Everyone said we were going to get hammered, it was going to be a rout, but in fact it's not turned out like that.

"You always take a hit in the mid-term, but these results provide a perfectly good springboard to go on and win the next General Election."

Mr Brown, the Chancellor, insisted that Labour had fought back in Scotland after being earlier written off.

He said: "To all those who came back to Labour - and to everyone throughout Britain - my resolve is that we, the Labour Party, will listen and we will learn as we continue to work for and serve the people of Britain."

Liberal Democrat leader Sir Menzies Campbell acknowledged the elections had been a mixed bag for his party, but insisted he had scooped "one or two very good results to be cheerful about".

Speculation arose over Sir Menzies' position after he repeatedly declared he would remain party leader into the next General Election.

Mr Salmond, who came from third place to win the Gordon seat for the SNP, said there was "a wind of change blowing through Scottish politics".

Mr Salmond was among politicians and electoral experts voicing anger at the numbers of spoilt ballot papers in Scotland, which will form the focus of an Electoral Commission inquiry.

In Wales, Mr Morgan said Labour had "confounded the doom-mongers". But he said there would have to be a discussion with Assembly Members about the way forward.

The Tories became the largest party on England's biggest council, Birmingham, for the first time in almost a quarter of a century.

Labour saw Plymouth and Gravesham - two of its few strongholds in the South - fall to the Tories, and lost overall control of Jack Straw's Blackburn with Darwen, but won North Lincolnshire from the Conservatives.

The Liberal Democrats gained control in Deputy Prime Minister John Prescott's Hull fiefdom and took Eastbourne from the Conservatives, but lost Torbay and Bournemouth to the Tories.