LABOUR held its seat in Hartlepool last night, despite a huge swing to the Liberal Democrats.

Accountant Iain Wright held off a strong challenge from LibDem candidate Jody Dunn to claim the seat for Labour with a greatly reduced majority.

And the Conservatives suffered a highly embarrassing night after being pushed into fourth place by the UK Independence Party.

Mr Wright polled 12,752 votes to win the seat with a 2,033 majority to ensure his party keeps the seat it has held for 40 years.

The by-election, prompted by Peter Mandelson's departure to Brussels as EU Commissioner for the UK, had been described as a two-horse race virtually from the outset nine weeks ago.

In 2001, Mr Mandelson, who had twice resigned from Government, enjoyed a 14,571 majority over Conservative candidate Gus Robinson, with the LibDems a distant third.

But the result this time was much closer, with Mrs Dunn, a 35-year-old barrister from Gainford, near Darlington, polling 10,719 votes to fall short of completing one of the biggest political upsets in decades.

The result for third place was even closer, with UKIP edging out the Tories by 149 votes to complete a miserable night for the party ahead of its annual conference in Bournemouth next week.

The LibDems had high hopes of taking the seat and had campaigned vigorously in the town in the run-up to the vote.

Although not enough to claim an unlikely victory, the swing from Labour to the LibDems was still a massive 18.82 per cent.

In his victory speech, Mr Wright hailed his win as a great result for Tony Blair, a huge disappointment for LibDem leader Charles Kennedy and an absolute disaster for the Tories' Michael Howard.