Labour had a mixture of good and bad news in south-east Wales, where it lost control of Cardiff, but won back Rhondda Cynon Taf (RCT) and Caerphilly.
Russell Goodway blamed Rhodri Morgan's D-Day absence
The Liberal Democrats were celebrating becoming the largest party on Cardiff council.
But Labour retook control from Plaid Cymru in two valleys heartlands, RCT and Caerphilly.
History was made in Monmouthshire - won by the Tories - with the election of the first two Plaid councillors.
In Cardiff, the Liberal Democrats are now the largest party with 33 seats, after Labour's number of councillors almost halved, to 27 seats.
The Conservatives won 12 seats and Plaid now have three councillors.
The high-profile and controversial Labour group leader Russell Goodway held on to his own ward in Ely by just 62 votes from an independent challenger.
But Mr Goodway blamed the party's losses on the state of the NHS in Wales as well as the row over First Minister Rhodri Morgan missing last weekend's D-Day anniversary in France.
Liberal Democrat: 33
Plaid Cymru: 3
He said: "If I've been chased down the garden path on any issue it's that the health service in Wales does not compare favourably with that in England.
"Frankly in the last four days we've lost support because of the failure of the first minister to go to the D-Day celebrations.
Lib Dem Rodney Berman says the mood changed against Mr Goodway
"We've had people taking Labour party posters out of their windows as a consequence."
Liberal Democrat group leader Rodney Berman called Mr Goodway's reaction "a convenient excuse."
"It's typical of Russell Goodway that it's always someone else's fault. This is about the people of Cardiff feeling that their council was out of touch with the way it was running its affairs."
In RCT, Labour took back control of the council from Plaid Cymru it lost dramatically five years ago.
Liberal Democrat: 13
Plaid Cymru: 1
It was a comprehensive victory for Labour in RCT,with the party winning 57 seats, with Plaid on just 13, Lib Dems on two, and three Independents.
Plaid was down from 38, and among its casualties was the former Rhondda AM Geraint Davies, who had been a councillor for 21 years.
Last year he lost his assembly seat, and now he has lost his council seat too, albeit by only two votes after two recounts.
Plaid Cymru AM Leanne Wood admitted the result was "very disappointing" and said the party would learn lessons from it.
She said Labour "poured a lot of resources into this area to the detriment of others... it's not a question of trust, I'm sure people will be coming back to Plaid Cymru."
Labour peer Baroness Anita Gale, former general secretary of the Wales Labour Party said:
"We have learnt the lesson of five years ago. The Rhondda people told us to sort ourselves out and we have."
In Caerphilly, Labour won with a majority of five, although the party group leader Graham Court lost his seat.
Labour councillor Harry Andrews said: "The party did extremely well when you consider the tirade levelled at us over Iraq from the nationalists, who decided it was a point that Labour would be vulnerable on. That proved not to be the case."
Plaid Cymru: 26
Lindsay Whittle, who led Caerphilly for Plaid, said: "We're disappointed we didn't keep control but we didn't implode. We've learnt a lot in the last five years and will use that to be a very constructive and vociferous opposition.
In Bridgend, Labour lost its majority, with no party in overall control.
Previously in Bridgend Labour had 39 of the 54 seats, but it was reduced to 21, with Lib Dems going up from seven to 13.
Labour also won back control of Merthyr Tydfil, but a new local party, People Before Politics - set up to challenge what it claimed was the "lack of accountability" at the local authority, won nine seats.
Plaid Cymru won seats on Monmouthshire council for the first time.
David Ashwin took one of the Caldicot wards; meanwhile former leading Labour councillor Graham Powell, who stood as an independent, lost to the Labour candidate.
Mr Ashwin said his election marked the start of a swing for his party and that he was successful because he listened to people.
The Conservatives emerged as the largest party in the Vale of Glamorgan, although they had no overall control, with 20 seats, compared to 16 for Labour and eight for Plaid Cymru.
There was no change in control in Blaenau Gwent, although independents gained five seats.
Labour also held Newport, although the Conservatives and Liberal Democrats each gained five seats.