The British National Party gained at least eight seats across the West Midlands in a disastrous local election for Tony Blair.
The far-right party saw councillors elected for the first time in Redditch and Solihull.
Its advances came as Tony Blair suffered a hat-trick of losses in the region, as Labour lost overall control of Stoke on Trent, Newcastle-under-Lyme in Staffordshire and Redditch in Worcestershire.
By 1.30am, the BNP was claiming three seats in Stoke and its first representative in Redditch.
In Sandwell, three more BNP councillors were elected - two of them in Tipton, which has a large ethnic minority community - in addition to one already on the council from the previous elections. All three gains were at the expense of Labour.
Jubilant winning BNP candidate Simon Smith said: "I am pleased to have won in Tipton because it is a very Anglo-Saxon and traditional area."
Fellow BNP victor Russell Green added: "After tonight's results we can all see that the BNP is on its way.
"It is plain to see that the vast majority of us are sick and tired of the dishonest and self-interested politicians that are ruining our communities and our country."
BNP candidate George Morgan took the Chelmsley Wood ward by just 19 votes from Labour.
Labour suffered a huge blow in the Birmingham Sparkbrook ward, where their sitting councillor was defeated by Salma Yaqoob, of the anti-war Respect party.
And Susanna McCorry, Labour's former cabinet member for social services, lost in her Erdington ward to the Conservative challenger.
The Prime Minister will today appoint a new Cabinet in a bid to relaunch his troubled Government.
Geoff Hoon, the Leader of the Commons, said: "The headlines over the past week or so have been very difficult."
Referring to the reshuffle today, he added: "Time now for a new team to take over."
But Mick Salih, the former leader of Stoke Council who lost his seat last night, announced he was to leave the Labour Party because it has become "a Tory party in disguise".
And an ally of the Chancellor, Gordon Brown, hinted that Tony Blair should quit.
Nick Brown, a former Cabinet Minister, said: "We can't drift on. It's pretty clear what's gone wrong and we need to address it."
Turnout in the poll was high, helped by the warm weather, but the voting was marred by allegations of fraud.
Liberal Democrat candidate Mohammed Khan, who last week was arrested on suspicion of trying to defraud the election process, suffered a massive defeat in the Birmingham seat of Nechells.
Police guarded polling stations in Bordesley Green, one of the most hotly contested wards in Birmingham, following a request from Mike Whitby, the leader of Birmingham City Council, for officers to protect ballot boxes.
But Birmingham was not the only city hit by alleged irregularities, and police were also investigating suspicious postal vote applications in Coventry.
The Conservatives appeared to have won around 40 per cent of the vote nationally, a good result for new Tory leader David Cameron.
And the pressure on the Prime Minister grew when a new poll revealed half the country wants him to stand down within a year.
The BBC survey found 36 per cent of voters want Mr Blair to go now, while 14 per cent would like him to resign before the end of 2006.
The Cabinet reshuffle will be presented as an opportunity for the Labour Government to put an end to the atmosphere of crisis and confusion which has dominated in recent weeks.
Home Secretary Charles Clarke could face the sack following the outburst over his admission that 1,023 foreign prisoners had been released without being considered for deportation.
The row continued yesterday when it emerged that a foreign criminal who was not deported after serving a jail term for robbery is awaiting trial on terrorism charges.