The Liberal Democrats have overturned a big Labour majority to win the by-election in Leicester South.
Lib Dem Parmjit Gill celebrates victory in Leicester South
Parmjit Singh Gill became the first Liberal Democrat MP from an ethnic minority in a 21% swing from Labour.
In his victory speech, Mr Gill said the people had spoken for Britain and "the message is that the prime minister has abused and lost their trust" over Iraq.
In Thursday's other by-election, Labour just held Birmingham Hodge Hill by 460 votes ahead of the Lib Dems.
In a turnout of 36%, the Conservatives slipped to third and Labour's victorious Liam Byrne said: "This is a disaster for Michael Howard."
Labour lost its 11,000 majority in a 27% swing from the Liberal Democrats and party leader Charles Kennedy said they would have taken the seat but for the anti-war Respect party.
Parmjit Singh Gill (LD) 10,274 (34.94%)
Sir Peter Soulsby (Lab) 8,620 (29.31%)
Chris Heaton-Harris (C) 5,796 (19.71%)
Yvonne Ridley (Respect) 3,724 (12.66%)
David Roberts (Soc Lab) 263 (0.89%)
RU Seerious (Loony) 225 (0.77%)
Patrick Kennedy (Ind) 204 (0.69%)
Paul Lord (Ind) 186 (0.63%)
Mark Benson (Ind) 55 (0.19%)
Jiten Bardwaj (Ind) 36 (0.12%)
Alan Barrett (Ind) 25 (0.09%)
Lib Dem majority 1,654
But he said he was delighted with the two by-election results.
"It was an excellent night, an absolutely stunning night for us. I think Iraq was a huge issue."
He said the results were "devastating" for the Conservative party.
"As Labour becomes unpopular, unlike what we have seen over many decades in British politics, people are not turning to the Conservatives as an alternative, they are turning to the Liberal Democrats.
"That changes the rules of engagement for the next general election completely," he told BBC Radio 4's Today programme.
In Leicester South, the Liberal Democrats leapt from third to first place, having won control of the city's council from Labour last year.
Mr Gill defeated former Labour city council leader Sir Peter Soulsby and Conservative Chris Heaton Harris.
BIRMINGHAM HODGE HILL
Byrne (Lab) 7,451 (36.45%)
Davies (LD) 6,991 (34.20%)
Eyre (C) 3,543 (17.33%)
John Rees (Respect) 1,282 (6.27%)
James Starkey (NF) 805 (3.94%)
Mark Wheatley (Eng Dem) 277 (1.36%)
James Hargreaves (OCV) 90 (0.44%)
Lab majority: 460
In his victory speech, Mr Gill said: "The people of Leicester South have spoken for the people of Britain."
Health Secretary John Reid acknowledged the result presented the government with a challenge but he added that they presented The Tories with a crisis "because they are going backwards".
He insisted that for Labour the outcome was "not unsatisfactory" given the party had been governing for seven years.
Tory co-chairman Liam Fox said: "I think
there is one very clear message from the local elections, the European elections
and these elections.
"Voters feel let down by Labour and they are increasingly
looking for a party that will beat Labour."
He said the Tories would never have expected to do well in the seats, despite insisting during the campaign that it was a three-horse race.
The two constituencies cover predominantly working class suburbs with large ethnic minority populations.
The polls came a day after the publication of the Butler report into the use of intelligence in the run up to the war in Iraq which criticized the government and the security services.
The two by-elections could be the last test of public opinion before a general election.
Birmingham Hodge Hill was prompted by Labour's Terry Davis' promotion to general secretary of the Council of Europe.
In Leicester South, the by-election was triggered by the death of long-serving MP Jim Marshall from a heart attack in May.