11:01 GMT, Friday, 2 May 2008 12:01 UK
Gordon Brown says it has been a “bad and disappointing” night for Labour, as the party suffers its worst local election results in at least 40 years.
BBC research suggests Labour won 24% of votes cast in England and Wales, behind the Tories on 44% and Lib Dems on 25%.
So far Labour has lost 182 councillors and key councils like Reading. Tory gains include Bury and North Tyneside.
Mr Brown insists his party will learn lessons. David Cameron called it a “big moment” for the Conservative Party.
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In the UK, the incumbent party nearly always gets beaten up badly in the local elections.