The British Prime Minister, Tony Blair, received a bloody nose from voters yesterday as the results of local elections across England presented him with his biggest setback since he came to power three years ago. His greatest loss of face came in London, where Ken Livingstone, the maverick left-wing MP expelled from the Labour Party for contesting the mayoral vote as an independent, swept to power as the capital's first directly elected leader. Mr Livingstone won 38 per cent of the first-preference votes, to 26.5 per cent for the Conservative Steve Norris, and a count of the second-preference ballots confirmed his victory. Frank Dobson, the official Labour candidate, scraped in on 13 per cent - only one per cent ahead of lacklustre Liberal Democrat Susan Kramer. Further indications of voters' dissatisfaction with the Government came with Labour's failure to win control of the new London Assembly. Across England, elections for more than 3,300 seats on 152 local councils saw Labour lose control of 14 councils as the Conservatives, who took nearly 600 seats from Labour, and the Liberal Democrats gained far more than expected. There was a surprise at a parliamentary by-election in Romsey in southern England, where the Liberal Democrats took the seat from the Conservatives. Mr Livingstone said the results - the last major test of popular support for Mr Blair and his modernised party before the next general election that must be held by 2002 - were a wake-up call for the Prime Minister. He warned that Mr Blair would have to listen to voters if he was to retain power. But the new London mayor sought to bridge the bitter divide opened up by Mr Blair's efforts to rig the Labour selection process to ensure his chosen candidate's nomination was accepted despite a majority in favour of Mr Livingstone's candidacy among individual Labour Party members. Mr Livingstone promised to establish an inclusive executive to run London and said he hoped to rejoin Labour to help it remain in government. He pledged to work with the Government to do whatever was best for Londoners. But Mr Blair, who had said Mr Livingstone would be a disaster for the capital, was less gracious as he made no secret of his disappointment at the result. 'There is no point in me hiding from you my views about Ken Livingstone. I haven't changed my views and I hold them very strongly,' he said, and notably omitted to congratulate the victor. But he added: 'We must do everything we can to ensure this works for London and works for Londoners, and he must do so too.' Of the broader result, he said they showed 'people out there want us to do more'. Tony Travers of the London School of Economics said the result in the capital represented a serious setback for Mr Blair. 'I think it reflects that Ken Livingstone is seen both in London and across the country as a potent threat to Tony Blair,' he said.