John Reid has claimed the Tories are in "crisis" after a "disastrous" night at the polls - despite Labour itself recording its worst showing since 1910.
Reid says there are 'enormous benefits' in staying in the EU
The health secretary conceded the drubbing meant Labour faced "a huge challenge" to argue the case for Europe
The Tories say they lost support to the UK Independence Party in a protest vote against Tony Blair's European stance.
The Lib Dems sought to play up their increase in vote - rather than their battle to avoid ending in fourth place.
The proportional representation system used for the European Parliament elections gives the minor parties the kind of chances not on offer at general elections.
But Labour's own vote dropped by 6% and the party is projected to take second place with only 23% of the nationwide vote.
The slump follows Labour's heavy losses in Thursday's local council elections.
With the Conservative share of the vote also falling, by 10%, Dr Reid attacked the opposition's showing.
Dr Reid told BBC Radio 4's Today programme: "It was a disappointing vote for us certainly, it was a particularly disastrous night for the Conservatives and it's been a good night across Europe for parties of protest, as well as parties who are in Britain against the European Union."
But he said: "The difference in Britain is that elsewhere in Europe, every alternative government, every opposition party has done very well, whilst the Conservatives have done disastrously badly.
"I really do think this gives us in the Labour party a huge challenge to argue our case for Europe because ... we're united in believing there are enormous benefits in the EU ...
"It gives the Conservatives, not just a challenge, but a crisis because they are the people who have been pandering to the sentiment that UKIP is cashing in on."
Mr Reid said the Tories were "radically divided" with some people wanting "to reform Europe", while the majority "just wanted to get out".
'Message to Blair'
Labour chairman Ian McCartney admitted the Iraq war had affected the results.
But he told the BBC: "The next election is going to be about the economy, public services, education - key bread and butter issues.
"And on all of those counts the Conservative Party has just failed abysmally to make any headway with the electorate."
Tory shadow secretary Michael Ancram said his party had been competing on the same ground as UKIP for the votes of people who opposed to the proposed European constitution but did not want Britain out of the EU.
"The message of this one will be to Tony Blair before he goes to Brussels
this week to negotiate again on the constitution, is that the British people are
very concerned and suspicious about what is happening in Europe," he said.
The Tories needed to look at how to strengthen their campaign against the constitution, he argued.
"We are not as high as we would like to be but we are still winning this election if you look at the overall result," said Mr Ancram.
He claimed the Liberal Democrats could not "crow" because they faced being pushed into fourth place by UKIP.
The Lib Dems have also won 3% less of the vote than they secured in the last UK general election.
But leader Charles Kennedy said the Tories had suffered a bad night while his party had underlined its claims to be the main challenge to the government in Labour's former heartlands.
He said: "In yet another set of elections the Liberal Democrats' share of the vote is up while the other main parties are down to unprecedented levels.
"It is now clear, on the evidence of all these elections, that the story of the next general election is one of three party politics.
"The Liberal Democrats have emerged stronger while the other two main parties have been deeply wounded."