Ken Livingstone brought huge relief to Tony Blair last night when he was re-elected Mayor of London after a bruising day which saw Labour lose control of Newcastle for the first time in 30 years.

Mr Livingstone was re-elected with 828,380 first and second preference votes, fending off the Conservative candidate Steve Norris with 667,178.

It was a piece of good news for Labour after a day of setbacks in the local council elections, with the loss of Newcastle to the Liberal Democrats being the low-point.

Deputy Prime Minister John Prescott said: "Iraq was a cloud, or indeed a shadow, over these elections. I am not saying we haven't had a kicking. It is not a great day for Labour."

Last night, with results in from 161 councils, the Tories had gained control of 12 more councils and an extra 261 seats.

Labour control seven fewer councils - with Leeds being another major defeat - and have lost 462 seats. The Liberal Democrats won an extra 131 seats, and in spite of their triumph in Newcastle, had a net loss of two councils.

From Washington, Mr Blair appealed to his party to hold its nerve and see through its programme of public service reform. Tory leader Michael Howard said his party now had a platform from which it could win the next General Election.

Tomorrow night's Euro-election results will be another important indicator of the public mood.

In the North-East, the LibDems repeated their success of 12 months ago when they seized control of Durham City by removing Labour from power in Newcastle for the first time in 30 years.

They won 44.5 per cent of the vote to Labour's 35.6 per cent, with the Conservatives without a seat on 15.4 per cent.

To add insult, the Labour council leader Tony Flynn, and his deputy, Keith Taylor, both lost their seats. Mr Flynn is one of the leaders of the campaign for an elected regional assembly.

Delighted LibDem leader Charles Kennedy flew straight to Tyneside and told rapturous supporters: "Newcastle is the jewel in the crown in a region consisting of the Angel of the North. This result will give a lot of thought to Tony Blair.

"The voters of Newcastle have given to us great responsibility and displayed great trust."

But Labour regained control of Hartlepool, to the delight of local MP Peter Mandelson. After a recount in one ward, Labour's victory was convincing, winning two seats from both the LibDems and the Conservatives.

Two years ago, Labour was deeply embarrassed in the town when the monkey-suited football mascot Stuart Drummond, an independent, was elected mayor.

On Gateshead council, Labour lost three seats to the LibDems but retained control.

There remained no overall control in North Tyneside, although the Conservatives gained six seats to win a total of 27.

Labour retained power in both Sunderland and neighbouring South Tyneside, albeit with some losses along the way.

A British National Party candidate in Sunderland, Ian Leadbitter, was arrested outside the count, at Crowtree Leisure Centre, on suspicion of assault occasioning actual bodily harm.

In North Yorkshire, neither the Tories nor the LibDems made gains in Harrogate.