Chancellor Gerhard Schroeder's Social Democrats have suffered a comprehensive defeat in state elections in Bavaria, preliminary results suggest.
CSU leader Edmund Stoiber said it is a "sensational" result
The Social Democrats (SPD) fell to 19.6% - down nearly eight points from their 1998 showing - while the conservative Christian Social Union (CSU) rose nine points to 60.7%.
It is the Social Democrats' worst result in the traditionally conservative region since World War II.
Correspondents say voters are unhappy with Mr Schroeder's economic policies, and are particularly concerned about the rapid rise in unemployment.
If confirmed, the win will be a personal triumph for Bavarian state premier Edmund Stoiber, who unsuccessfully challenged Schroeder in last year's federal vote.
Mr Stoiber called it a "sensational" result which sends a message to the government that people were unhappy with the chancellor's radical programme of economic reforms.
The SPD's defeat, which follows heavy losses in state polls in Hesse and Lower Saxony in February, will underline Mr Schroeder's weak standing nationally after three years of economic stagnation.
But it may clear the way for negotiations with the conservatives at a national level, as the chancellor seeks to get his reform package through parliament this autumn.
The Greens also benefited from the SPD's rout, increasing their share of the vote to 7.7%, making them the third party to clear the hurdle to take seats in the regional parliament.
The CSU has been in power in Bavaria - one of Germany's richest and largest states - for the past 40 years.
The BBC's Tristana Moore in Bavaria says the crushing victory gives the CSU almost absolute power.
Compared with the rest of Germany, Bavaria is doing well - but there are ominous signs. Unemployment, while low, has risen faster than in any other state this year.
Franz Marget, the Social Democrats' candidate, has been called a tragic hero by one German news magazine after he travelled thousands of kilometres on the campaign trail with little support from the national party.
The elections have been overshadowed by the arrest of a group of neo-Nazis who were suspected of planning to bomb a new Jewish cultural centre in Munich.
The German authorities believe the group may have intended to attack the centre on 9 November - the anniversary of the Nazi anti-Jewish pogroms, the Kristallnacht.