The North East is traditionally a Labour stronghold
The new "super council" for County Durham is to be run by Labour.
From 2009 the two-tier system will be replaced by a unitary council, and a transitional authority has been elected to oversee the change.
Labour has a majority with a total of 67 seats. The Lib Dems gained 27, Independents 22, and Conservatives 10.
Labour has also held onto Sunderland Council but with a reduced majority, after losing four seats to the Conservatives.
Its majority stands at 21, with 48 seats. The Conservatives have 22, independents four and the Lib Dems one.
Hilary Armstrong, Labour MP for North West Durham, said: "New Labour is doing very well, but it is the establishment and when people get grumpy they like to kick the establishment.
"There's still a lot of support for Labour and we need to get the right connection with the public and go forward."
Michael Bates from the Conservative Northern Board put his party's gains down to a combination of national issues and local campaigning.
He said: "The water table is rising for the Conservatives."
Carol Woods, a Lib Dem Councillor for Durham City, said her party had done very well.
"The interesting thing is to see the decline in Labour support. You can't call it the Labour heartland any more."