They may have escaped a beating in the North-East, but across Britain it was a different story.
While avoiding the meltdown some had been predicting, the party lost hundreds of councillors across the country, was overtaken by Nationalists in the Scottish Parliament and saw its Welsh Assembly representation shrink.
Tory leader David Cameron hailed "a real breakthrough" for the Tories, whose councillor gains sailed past 800 yesterday.
But Labour officials insisted last night that the Tories had "flatlined" as the BBC revised their projected vote share down to 40%, the same as last year's elections.
Labour's vote share has apparently increased to 27%, up one point on last year, while the Liberal Democrats were down a point to 26%.
The prime minister said the results provided "a perfectly good springboard" for Labour to win the General Election expected in 2009 or 2010.
Gordon Brown, who is expected to take over as prime minister this summer, resolved yesterday afternoon to "listen and learn".
The elections were marred by delayed results because of new systems and technical glitches, prompting the Electoral Commission to launch an official inquiry into voting chaos in Scotland.
Confusing ballot papers were blamed for as many as 100,000 invalid votes in elections to the Scottish Parliament and councils north of the border.
New electronic vote-counting equipment also gave rise to concerns as counts in England and Scotland suffered delays due to technical difficulties.
In Scotland, the Scottish National Party became the biggest party in Holyrood for the first time, winning 47 seats to Labour's 46. SNP leader Alex Salmond will now try to form a coalition executive.
Labour remained the biggest party on the Welsh Assembly, but leader Rhodri Morgan said the party - which has been in charge of a minority administration - would now have to find a coalition partner after losing three seats.
But Labour's projected losses of seats in English councils were likely to fall short of the 650-750 predicted by some observers.
With results in from 324 councils, the Tories had won 856 new seats and taken control of another 38 councils.
Labour were down 465 councillors, losing control of eight councils. The Lib Dems lost 243 councillors while five town halls left their grasp. On a hastily-arranged visit to Chester, Mr Cameron said: "We are now the party of the whole country, winning in every part of the country, winning against Labour, winning against the Liberal Democrats."
But Mr Blair said it had been "a dreadful set of results" for the Liberal Democrats and the Tories "have not broken through" in the way they wanted.
"Everyone said we were going to get hammered, it was going to be a rout, but in fact it's not turned out like that," he told reporters at Labour's London HQ. "You always take a hit in the mid-term but these results provide a perfectly good springboard to go on and win the next General Election."
Leader lost but gains elsewhere
The Labour Party lost its leader in Newcastle - but managed to chip away at the Liberal Democrats' majority in the city.
Opposition leader John O'Shea was ousted in his Newburn ward by Lib Dem Michael Lynch - a former Labour member for 45 years who lost his seat to the massive Lib Dem landslide in 2004.
But Labour managed to start clawing back some of the ground lost three years ago, taking two seats in each of South Heaton and Woolsington wards.
Deputy group leader Nick Forbes, who hopes to succeed Mr O'Shea, said the victories were evidence of the party's efforts to put younger candidates into winnable seats.
And Labour were celebrating in North Tyneside last night [Fri] after a series of close victories saw them gain a seat.
The Conservatives had hoped to put pressure on Labour's elected mayor John Harrison by cutting the party's councillors to less than a third - which would have made him unable to force through a budget on Labour votes alone.
But while the Tories failed to gain any ground, Labour actually increased its number of seats by gaining Chirton ward from independent Sandy Carter.
They also came out victorious in a closely fought contest against the Lib Dems in Battle Hill where they won by just 11 votes, while Labour Coun Muriel Green was celebrating after holding on to Weetslade by a majority of 249 despite fears the seat could be lost to the Conservatives.
Mr Harrison said: "These results are recognition for the tremendous hard work and effort put in by our candidates who have fought a campaign about moving North Tyneside forward."
A whisker away from their goal
Liberal Democrats were celebrating last night after success in Castle Morpeth, doubling their seats on the borough council and narrowly failing to become the biggest single party.
Lib Dems ended with 12 seats on the hung authority, the same as the Conservatives who gained two as the Independents suffered heavy losses.
The council is run by an all-party coalition of Conservatives, Lib Dems, Labour, Independents and the single Green - but that could change.
The Independents, who have been involved in a recent row over changes to the car parking regime in Morpeth, dropped from seven seats to just two.
Castle Morpeth Mayor Geoff Proudlock lost in Morpeth South to Lib Dem Joan Tebbutt and in Hartburn Allison Douglas was beaten by Tory Richard Dodd.
Labour, previously the second biggest group, dropped from nine seats to six, but Green Nic Best held Morpeth North Central.
Independent Alan Taylor lost Stannington and Mitford to Tory David Towns, and Independent Joe Sennett lost to Lib Dem David Woodard in Ulgham.
Lib Dem group leader David Parker said: "We set out a year ago to achieve the aim of becoming the biggest single group on the council for the first time ever, and we have almost done that."
Independent leader John Beynon accused the Lib Dems of taking sole credit for things the all-party coalition had achieved. "I am amazed at how the Lib Dems seem to have swept the board and very surprised to have lost so many seats."
Tory leader Peter Jackson said: "We have done very well to gain two seats and consolidate our position. We will be talking to other groups to try to work out a way of going forward."
Council leader loses his seat in Tynedale
Tynedale will have a new leader after Coun John Herron lost his seat.
Deputy leader Coun Michael Walton will be in charge until the Conservatives meet to officially elect a new leader.
Rival councillors paid tribute to Mr Herron last night.
Liberal Democrat Coun Paul Macdonald, who retained his Ovingham seat, said: "It has to be said that John Herron has been a good leader for Tynedale.
"Today has been a mixed day as far as we were concerned. We are now the official opposition, but we have lost a very good councillor in Gerry Caldwell who will be sorely missed."
Leader of the Labour group, Coun Glenn Simpson, also enjoyed a mixed day. He said: "We are down to eight from 10 but it could have been worse given the national political climate."
Mr Herron, who has headed the Conservative controlled council for more than five years, lost his Leazes ward seat, along with fellow Conservative Rad Hare, to Liberal Democrat candidates Rebecca Elton and Judy Lloyd.
But Mr Herron remained upbeat.
He said: "I am disappointed, but it is a good day for the Conservatives, because we have finished up by two seats from 28 to 30."
Page 2: Vote of confidence in young councillor
Leading parties take a battering
Control almost left to toss of a coin
Mixed fortunes in County Durham
Vote of confidence in young councillor
He's believed to be the youngest councillor ever in the North-East, but at just 19 years old, Steven Bridgett is no newcomer to politics.
As an ardent youth volunteer he won a Local Hero Award from the Government back in 2005, and is currently a trustee on the local youth association in his home town of Rothbury, near Alnwick, Northumberland.
And he also got his face known locally, not least by doing a milk round.
But the law and politics student at Newcastle College was still too young to stand at the last election.
A lowering of the age for potential candidates from 21 to 18 in January, however, meant the young Liberal Democrat was free to enter the fray this time around.
And after an anxious wait at Alnwick on Thursday night - his was the last result in - Steven finally got the break he's been preparing for all these years.
He managed to secure one of three seats on the Rothbury and South Rural ward, standing against veteran councillors Peter Dawson, Alan Renton and Andrew Duffield.
It was the latter who lost out in the end, taking 496 votes to Steven's considerable 587 - the second highest tally out of six candidates.
"I've been interested in politics since I was about 13," said Steven, from Jubilee Crescent.
"I believe that you have to have young blood on the council, and this was my first venture into local politics."
Leading parties take a battering
A bruising electoral encounter between Conservatives and Liberal Democrats has led to a reversal of fortunes for both parties in North Northumberland.
The Tories drew first blood at Alnwick on Thursday night, by sensationally toppling leader of the council and Lib Dem political heavyweight Heather Cairns with their new Embleton candidate, South Charlton farmer Robert Thorp.
A prominent campaigner against plans to build wind farms in the local countryside, Mr Thorpe gained 31 more votes than his opponent to take her seat.
Speaking afterwards, he said: "I'm looking forward to working hard for the people of Embleton ward and taking the best interests of Alnwick District forward."
Gracious in defeat, Mrs Cairns said she was now looking forward to spending more time with her grandchildren.
The Conservatives also went on to establish themselves in Alnwick Castle, Amble West, Longhoughton, Rothbury, Shilbottle and Whittingham wards, while retaining their long-held seats in Harbottle and Elsdon, and at Longframlington.
Although the Lib Dems retain 11 members on the council - the same as their last election result - the balance of power in Alnwick now firmly rests in the traditional alliance between the Independents, with eight seats, and the Tories, who gained seven seats and held two. Labour, meanwhile, held its traditional two seats in Amble.
But at Berwick, it was the blues who were in for a battering at the polls.
Not only did the Tories lose council leader John Stephenson and his deputy Clive Hallam-Baker, but they saw their slim majority of recent years completely swept away by a Liberal sea of yellow.
In all, the party lost two seats, with the Independents losing a further two, while the Lib Dems gained four.
It takes the Liberals to 13 seats on the council, with the Tories following on 10, the Independents on five and Labour on just one. And with no party strong enough to gain an overall majority, Berwick is also in line to form a ruling coalition in the coming weeks.
Control almost left to toss of a coin
The toss of a coin was almost the deciding factor in whether Labour retained control of one of their North-East strongholds.
Five fewer votes for one Labour councillor would have stripped the party of their overall majority on Derwentside District Council.
As the clock ticked towards 4.30am yesterday, members of the Labour and Liberal Democrat parties demanded a fourth count of votes for three seats up for grabs in Annfield Plain.
Control of the council was finely poised, with Labour needing to win at least two of the Annfield Plain seats to retain control of the council.
The first count saw a Labour victory, but the second favoured the Liberal Democrats. When a third count revealed a tie, it was suggested control of the council would be decided by flipping a coin. But Labour were relieved when the final count placed power in their hands.
Despite this, Labour lost 11 seats, meaning they only just gained control with a majority of two.
Kevan Jones, Labour MP for Durham North, fired heavy criticism at the Labour Group when he heard the results.
He said: "I think that tonight was very predictable. The group has been ignoring the needs of local residents."
But Alex Watson, leader of the Labour group remained positive.
He said: "The national scene hasn't affected us like I thought it might and we didn't lose as many seats as I thought we would."
Mixed fortunes in County Durham
Labour only just held power in one of its safest North-East councils, lost overall control of another and failed to make inroads in a third County Durham authority where it ruled until four years ago.
But it enjoyed successes in Chester-le-Street and Easington.
The party was left with a three-seat majority on Derwentside after a surge of support for the Independents - the final tally was Labour 29, Derwentside Independents 24 and Lib Dems two.
On Durham City council the Lib Dems kept 30 seats, Labour 17 and Independents three.
Labour lost overall control of Wear Valley where Lib Dems now have 16 seats - Labour is still biggest with 18 seats, but will need to rule either with Lib Dems or Independents, of which six were elected.
In Chester-le-Street, Labour kept its overwhelming majority but lost three seats. The council consists of 24 Labour, five Independents, two Conservatives and one Liberal Democrat.
In Easington Labour held 47 of the 51 seats, the rest split between Lib Dems and Independents.
Apart from husband and wife Peter and Maureen May at Chester-le-Street, Conservative councillors are an almost extinct breed in County Durham.