Ukip leader Nigel Farage appeared to be heading for defeat in South Thanet early this morning.
A Labour source said the first boxes to be opened at the count indicated the Ukip leader was in third place.
Mr Farage has said he will resign the party leadership immediately if he fails to take the seat.
At an election night party, Mr Farage said: "We will have to see - the first result we got tonight was from Sunderland. It showed the Ukip vote up by 7,000 and the Tory vote down by 1,000.
"I want to congratulate the editors of The Sun and the Daily Mail - they said the Ukip vote would split the Tory vote. God help us."
A Labour source at the South Thanet count said: "On the boxes that have been opened, that's how it appears to us. The ward is Cliftonville East, which is a strong Tory ward that we haven't held for 30 years."
"We would expect Ukip to do well. The boxes, from what we have seen, are showing the Tories comfortably in the lead and Ukip behind that and Labour closely behind that.
"We shouldn't be competitive with Ukip in that ward. It's only one ward but we feel that Ukip are not going to win."
A Tory source said it was still too tight to call in South Thanet, while Labour's candidate Will Scobie was also reluctant to make predictions.
He said: "I haven't seen enough of the boxes. They are all over the place. The thing is it's so geographically-split that you could look at two boxes and they could tell you absolutely nothing."
Douglas Carswell, running to hold Clacton for Ukip, told Sky News Ukip had made an extraordinary leap forward, projecting three to four million votes for the party.
He said: "If it's the case Ukip gets four million votes and only a clutch of seats, that's more of a reflection on how dysfunctional our political system is rather than a reflection of Ukip's tactics."