Voters delivered a crushing defeat to German Chancellor Gerhard Schroeder, whose Social Democrats (SPD) suffered their worst results since World War II.
Economic woes have bedevilled Schroeder's government
The SPD got just 21.5% of the vote in the European Parliament elections, while the conservative opposition parties polled 44.5%.
Senior figures in the SPD are calling for consequences at cabinet level.
The BBC's Ray Furlong in Berlin says voters have punished the SPD for their economic woes and painful reforms.
The party leadership is meeting to discuss what most of the German media is describing as a disaster.
Chancellor Schroeder has presided over three years of almost zero growth in the economy and an unemployment rate that has remained stubbornly above four million people.
1. Christlich-Demokratische Union (CDU) - 40 MEPs
2. Sozialdemokratische Partei Deutschlands (SPD) - 23
3. Buendnis 90/Die Gruenen - 13
4. Christlich Soziale Union (CSU) - 9
5. Freie Demokratische Partei (FDP) - 7
6. Partei des Demokratischen Sozialismus (PDS) - 7
Extra fees at the doctor's, cuts in benefits and new rules making it easier to fire people have not gone down well either.
Many of Mr Schroeder's traditional Social Democrat voters stayed at home in protest against policies they feel go against party principles, our correspondent reports.
The SPD also suffered a humiliating defeat in state elections in Thuringia, coming third behind the former communists.
And most analysts predict more setbacks in further state elections in September, piling more pressure on the chancellor.
"We are in the middle of a difficult reform process," Mr Schroeder said on Monday, commenting on the blow to the SPD. The party scored 30.7% in the 1999 European elections.
"Frustrated SPD voters stayed at home" said the top-selling tabloid newspaper Bild.
Other papers were just as damning, our correspondent reports.
"Mr Schroeder's government is a sinking ship," said one, while another argued that the next 12 months could be the story of an administration whose death had already been announced.
Germany's next national elections are due to be held in two years' time.
The conservative Christian Democratic Union (CDU) is now demanding a seat on the next European Commission.
Germany has two commissioners currently, but in November it will be down to one - and last week the government said it would send EU Enlargement Commissioner Guenter Verheugen back to Brussels for a fresh term.