The fortunes of a North-East town's Labour party were looking brighter today as it gained an extra seat in a by-election, creating a hung council.

Hartlepool's opposition Labour group now holds 22 seats - the same amount as the leading Liberal Democrat-Conservative coalition.

The balance of power now lies in the lap of the three independent candidates, Stan Kaiser, formerly Conservative, Cath Hill, formerly Labour, and John Marshall, formerly a Liberal Democrat councillor.

Bill Iseley, the Labour candidate, received 465 votes to Liberal Democrat Ken Fox's 240 votes at the by-election in Jackson ward on Thursday night.

Now, confidence is growing within the Labour camp that they will win a majority in the next election, in May next year.

Even Conservative leader David Young said: "We only had a 30 per cent turnout for the Mayoral elections this year. If there is the same apathy shown by the electorate next year I can see Labour winning it."

Labour's rock-solid support in the town crumbled for the first time in 22 years at the May 2000 council elections, when they lost overall control, and this was seen as a massive blow to the party.

The constituency is famous for providing the supposedly safe seat on which MP Peter Mandelson built his high profile political career.

In the June 2001 elections, the town showed its allegiance to New Labour and backed the MP for another full term in Parliament, despite his controversial resignation from the Cabinet.

But at the time Mr Mandelson said his Labour colleagues on the council would have to find out why they suffered such a severe electoral beating.

This allegiance is showing signs of continuing in the elections in May.

However, Arthur Preece, Liberal Democrat and council leader, said: "I think our chances of winning at the next election are relatively good.

"The coalition will continue to make decisions that are in Hartlepool's best interests."

Labour leader Russell Hart said: "The by-election result was excellent news for the Labour party in Hartlepool. The swing back to Labour was very positive.

This will be the only opportunity we have to test the strength of following in the town between now and our elections in May.

"There is a very strong possibility that Labour will, once again, be the driving force in the town."