Lib Dems concede Oldham by-election
The Liberal Democrats have conceded defeat in Oldham East and Saddleworth as the coalition suffered a bloody nose in its first by-election test.
Party president Tim Farron said its candidate Elwyn Watkins had come a "decent second" to Labour in the contest.
But there were early indications that the Opposition could have secured a majority of 3,000 or possibly even more - which would be a major setback for Deputy Prime Minister Nick Clegg and the Lib Dems.
Labour activists had been optimistic after a relatively mild afternoon in the constituency pushed turnout to a respectable level, confirmed by count officials as 48.06%.
Senior party sources later said it was looking like Debbie Abrahams had secured victory with a majority of 3,000 - although the Lib Dems estimated the margin may be closer to 1,000.
Mr Farron said: "I will count my chickens now. I am pretty sure we have come a decent second."
The by-election was called after an election court declared last year's contest void after finding that Labour victor Phil Woolas had made false statements about the Lib Dem candidate Mr Watkins.
There were expectations of a local backlash against Labour because of the circumstances of the by-election, but the Lib Dems have also slumped dramatically in the polls since last May.
Despite finishing just 103 votes behind Labour in last May's general election, polls last weekend found Mr Watkins trailing by a massive 17 points.
A substantial defeat would be highly embarrassing for Mr Clegg, who has made a series of high-profile visits to the seat in a bid to shore up their vote.