Citizen Ken is voted in, while Blair is bloodied but unbowed

It was Tony's shambles and he's paid the price

It was Tony's shambles and he's paid the price. Ken himself seemed fit to frighten the middle classes into a proper sense of duty (or self-interest, at any rate), with all that talk of capitalism being a bigger mass killer than Adolf Hitler. The Prime Minister warned he would be a disaster for London.

A sustained advertising campaign encouraged the punters to think the disaster had already happened. Visual images linked Mr Livingstone's support for "direct action" to Monday's riots, which saw the desecration of memorials to Britain's war dead.

In the end, the fear of "looney" leftism once more on the march drove a despairing Daily Mirror - sadly, and while pouring the opprobrium on Mr Blair's head - to break with its own history and back the Tory, Steve Norris.

But all to no avail. Londoners had disliked New Labour's attempted stitch-up of the electoral college, saw Citizen Ken as the victim of control freakery and systematic smear and exacted their revenge on the hapless Dobbo.

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Widely held a decent man through and through, Frank Dobson had cut a hopeless figure from the outset - never shaking off the perception that he had been forced into standing for a job he never really wanted. (Having earlier refused her leader, Mo Mowlam isn't likely to find her standing much improved with Number 10, either.)

Yesterday, Londoners granted Mr Dobson his wish for safe and speedy return to Westminster, and whatever compensation Mr Blair feels obliged to give him. He might be advised not to count on too much, for - as Dr Mowlam could tell him - gratitude has not conspicuously proved one of New Labour's strongest suits.

Mr Blair's thoughts will have been fixed on the ingratitude of the voters. In London, as in Scotland and Wales before, his devolution project had exploded in his face. Not only had Mr Dobson been forced into a humiliating third place, and abandoned by nearly two-thirds of Labour voters - they had also declined to constrain the newly crowned King of London with a Labour majority in the new Assembly.

And, as expected, the English council contests had completed the double whammy - giving the Tories close to 600 gains, while seeing the Liberal Democrats claim a best-ever 28 per cent share of the vote, compensating inevitable losses in the south-east by making substantial inroads in traditional Labour heartlands in the North.

In the context of London, there was no disguising the brutal, personal rebuke for Mr Blair. And in the wider national context, the very able David Blunkett acknowledged a bad night for the government, with lessons to be learned.

But as sensation at Romsey hovered into view, the Education Secretary correctly observed that for anyone to deduce from all this a deeply unpopular government heading for defeat was entirely to miss the point.

In the early hours of yesterday morning - when it seemed the Tories might just hold Romsey - Mr Blunkett insisted this would represent "survival" rather than "recovery" for William Hague.

In the end, it looked a good deal worse. The Liberal Democrats had seized what had been the 50th-safest Tory seat in the country - completing a resoundingly good night for Charles Kennedy, after much criticism of his laid-back approach to leadership by Lib Dems still feeling the loss of action man Paddy.

The Romsey victory was all the sweeter for Mr Kennedy, having put his neck on the line by spearheading the by-election effort, and publicly accusing Mr Hague of "gutter politics" in his approach to the asylum question.

Taken in the round, Mr Hague, too, had reason to be happy. Even allowing for the usual playing-down of expectations, the council results were better than he might have hoped, and his leadership has been secured. But we are still talking about his leadership of the Opposition in the next parliament.

On Thursday's abysmally low turnout, Mr Hague's estimated 37 per cent share of the national vote is nowhere near what he should be claiming a year before the expected general election. Taken together with his party's vulnerability to a Lib Dem challenge, augmented by tactical voting by Labour supporters in a previously safe Tory seat, the unmistakable conclusion is that - while the Tory recovery is under way - it is not yet a credible contender in the general election stakes.

Like a patient who has narrowly escaped death in a horrendous car crash, the Tory Party still faces a long and painful recovery process. Moreover, courtesy of the Romsey setback, the path to full political health is less, rather than more, clear.

With Romsey secured, and the council gains in the bag, the pre-packaged Tory spin wrote itself: Mr Hague had found a resonance among voters for his "populist" policies on Europe, crime, Section 28 and the "promotion" of homosexuality in schools, and on "bogus" asylum-seekers.

However, Mr Hague cannot claim that message from Steve Norris's very impressive performance in London - on the back of a campaign which cleverly distanced the candidate from his party and offered the electorate a very different politics of inclusivity, fairness and tolerance.

Just when he thought he had cracked it, Mr Hague will have to go back to the drawing board. The reclaiming of Essex man and woman will increase the temptation to continue the reconnection with "traditional" Tory values. The message of London - to which Mr Norris adapted himself so well - will alert him to the risk in that.

The immediate focus yesterday was on the perceived need for Mr Blair and Mr Livingstone to make their peace. However, one shrewd Tory commentator divined the potential for the Prime Minister to play a piece of Clintonesque triangulation politics - casting Mr Livingstone and Mr Hague as twin extremes against his government of the centre and the sensible.

Mr Blair may yet come out smiling. True, he's had a drubbing. His Millbank machine no longer looks impregnable. Election defeats always carry intimations of political mortality. But it's still a long way off.