German Chancellor Gerhard Schroeder has vowed to stick to his reform programme despite an election drubbing in his former stronghold city of Hamburg.
State elections on Sunday delivered Mr Schroeder's Social Democrats their worst defeat there since World War II.
The Christian Democrats won an absolute majority in the state parliament after a huge upsurge in support.
The result was being blamed largely on Mr Schroeder's unpopular reforms, which include cutting some welfare benefits.
"
We will keep the process going because there is no
reasonable alternative
"
Gerhard Schroeder
On Monday Mr Schroeder acknowledged the result had been "painful", but he insisted there would be no retreat.
"The process is necessary for this country and its people," Mr Schroeder told journalists. "We will have to explain that more carefully now.
MAIN PARTIES
"But we will keep the process going because there is no reasonable alternative."
Mr Schroeder is facing opposition from within his own party to his reforms. He announced he was standing down as party leader in a move seen as a tacit admission he was having trouble relating to his party's grass-roots.
More than a dozen other elections will be held in Germany over the coming year, providing further tests of Mr Schroeder's popularity.
National opinion polls suggest the Social Democrats are around 20 points behind the conservative Christian Democratic Union (CDU) in German public opinion. The next general election is not expected until 2006.
Mr Schroeder's has repeatedly insisted that the problem with his Agenda 2010 package of reforms is not that they are wrong, but that they have not been properly communicated to the public.
Reform row
The reforms, among other things, cut unemployment benefit, make it easier to lay off workers and change healthcare rights, including making people pay more to visit doctors.
Mr Schroeder, trying to inject life into a sluggish economy, says the reforms are vital and to pull back would be wrong. He also believes radical change is needed to confront Germany's ageing population.
Hamburg was a Social Democrat stronghold until 2001 when the party was ousted by a coalition led by the CDU.
The Hamburg poll was called after the city government collapsed last December amid in-fighting in the coalition.
The Hamburg election also marked the end of a law-and-order party which performed strongly in 2001 elections in the wake of revelations about the 11 September hijackers. The party has since split in two and failed to win any seats on Sunday.
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