First Minister Rhodri Morgan has urged the Labour movement not to split and turn in on itself after the Crewe and Nantwich by-election defeat.
Mr Morgan was speaking at the Wales TUC conference in Llandudno, as the party digested the Conservative win.
He said it was essential that the party did not engage in an internal blood feud as in the 1970s.
Mr Morgan said the effects then were that the Conservatives were able to exploit the divisions.
Outside the conference, Mr Morgan said: "If the Labour movement splinters between its trade union arm and its political arm by having a huge row over public sector pay, then you can see that there would be dangers David Cameron would pull off exactly the same trick as Margaret Thatcher did and we would have made it easier for him .. to walk in."
Conservative candidate Edward Timpson won Crewe and Nantwich with 7,860 more votes than the Labour candidate, former assembly member Tamsin Dunwoody.
It was the first tory by-election gain since 1982 and a swing to the conservatives of 17.6 per cent since the 2005 general election.
Meanwhile, the new president of the Wales TUC said unions still face the challenge of changing workplaces.
Vaughan Gething, a Cardiff solicitor, is the Wales TUC's first black president and at 34 is also the youngest.
Elections took place at the annual conference in Llandudno.
Mr Gething, a member of the GMB, will serve for a year. He said he wants to "take stock" of challenges for Wales.
Around 300 delegates are attending the conference
Paul O'Shea of Unison Cymru was elected vice president.
Mr Gething said: "We still have to face up to the organising and recruitment challenge as the economy has changed and workplaces have changed.
"As president I want to see us build on the work of previoius years and take stock of the challenges facing us in Wales."
The Wales TUC has almost 50 affiliated trade unions and represents nearly half a million workers.
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