The war is over. Now the big guns prepare for battle

At least one of the two eruptions of the day cannot have come as a surprise. The newly victorious Prime Minister must have known when he called John Prescott last Friday to suggest that David Blunkett take over the running of local government in his revamped Cabinet, there was likely to be blood on the carpet.

At least one of the two eruptions of the day cannot have come as a surprise. The newly victorious Prime Minister must have known when he called John Prescott last Friday to suggest that David Blunkett take over the running of local government in his revamped Cabinet, there was likely to be blood on the carpet.

Prescott and Blunkett are big men with big egos, proud of having come up the hard way. When Blunkett ran into trouble last December, over disparaging comments about Cabinet colleagues that he had made his biographer, Prescott said aloud what others were saying privately, that the then Home Secretary was "arrogant". No surprise, then, that Prescott did not want Blunkett working in the Office of the Deputy Prime Minister. Nor did he want to let go of a major part of his departmental brief.

What probably did come as total surprise was the other show of ministerial intractability, when Ruth Kelly objected to Tony Blair's plan to move her sideways, demoted, as she saw it, from education to deputy at the Treasury.

That put a large spoke in another part of Blair's model Cabinet, in which his former policy adviser David Miliband was to take over the nation's schools and universities, with another policy adviser, Andrew Adonis, who was to become Lord Adonis, as his deputy.

Eventually, a frazzled Prime Minister took the line of least resistance by leaving Kelly in place, putting Miliband in to deputise for a mollified Prescott, and finding another job for Blunkett.

It was all so different from eight years ago; ministers quivered in awe of the new leader whose personal popularity had delivered a stunning election success. It puzzles Blair that the longer he goes on winning, and the more he learns on the job, the less people seem to like him.

Perhaps the most enduring image of election night is of an ordinary man driven by grief making his first appearance as a politician. Reg Keys did unusually well to pick up 4,252 votes running against Blair in Sedgefield. After the count, he paid tribute to the 88 British servicemen killed in Iraq, one of whom was his son, L/Cpl Tom Keys. As he described his son's death, and expressed a hope that "one day the Prime Minister will be able to say sorry", there was a woman standing behind him whose eyes widened with emotion and whose face took on the haggard look of someone close to tears. It was Cherie Blair.

The Prime Minister, at Cherie's side, was as impassive as a statute, staring ahead with a fixed frown. He looked exhausted. When the speeches were over, Blair shook hands with his Conservative and Liberal Democrat opponents, but avoided contact with the grieving father who had brought the Sedgefield campaign to life. Caution born of experience warned Blair that raw emotion and political gestures do not mix.

At that stage in the night, the results were looking bad for Labour, and the experts were expressing surprise at how well the Conservatives were doing - unaware that within 12 hours the Conservative Party would be plunged into another leadership crisis, its fifth in 10 years. Blaenau Gwent, Michael Foot's and Aneurin Bevan's old seat, had just been lost to an independent, a clash of Old Labour versus New Labour that produced a 49 per cent swing against the official Labour candidate, one of the highest in British electoral history.

But Blair's spirits had visibly recovered by the time he reached Trimdon Labour Club to thank his party workers, early on Friday morning. Enough results had come in for him to know that he was back with a sizeable majority. (The final count in Harlow, completed around noon yesterday, gives Labour an overall Commons majority of 67, but that figure will drop to 66 after voters in South Staffordshire have had their say in a poll delayed by the death of a candidate.) He had pulled off a feat which a decade ago would have seemed impossible - he had led the Labour Party to its third thumping general election victory. Yet, on his own side, MPs were speculating aloud just how long he could carry on.

Some of those openly calling for his swift departure can be brushed aside as the "usual suspects" enjoying the luxury of safe Labour seats. These include veteran left-winger Jeremy Corbyn, who told Channel Four's Morgan and Platell programme last night that Blair should go early in 2006. But Ian Gibson, Labour MP for Norwich North, who did not vote against the Iraq war and has seen his majority cut to 5,459, also wants an early rerun of that famous conversation in Granita restaurant, in which Blair is reputed to have promised to step aside one day for Gordon Brown.

"There are serious discussions going on right now about how long it will last. There will be a real Granita this time. It has to happen. He [Blair] is seriously damaged after the election. Brown will be home and dry," he forecast.

Patrick Hall, who also abstained on the main Iraq vote, and held his Bedford seat last week by 3,383 votes, has also called for a leadership contest "in the next 18 months".

Overall, for Blair, the election result was much as expected. His own advisers had discounted favourable opinion polls and were forecasting a majority of 70 to 75. If the week was not an unqualified success, disaster was averted.

The Tories, on the other hand, are licking their wounds again, after an election night that began badly and then seemed to improve, until the mood of false euphoria was smashed by Michael Howard's intention to resign.

For Baroness Thatcher the night was frustrating. The star guest at the ITN election party was watching the television in a booth on the boat hired for the occasion and in an ill-humour. Her stabbing finger made clear the object of her ire: the tally of seats in the bottom right corner of the screen. As Labour's total climbed to 11, the Conservatives and Lib Dems were stuck resolutely on 0. Perhaps sheforgot that safe Labour seats, being predominately urban and therefore small, are always the first to declare.

Over the river in the Tories' new headquarters, the mood was more sanguine, particularly when the party retook Putney. The basement bar hired for the campaign staff party shook with cheers as Justine Greening promised to lead a phalanx of new Tory blood into the Commons. The election of Adam Afriyie in Windsor encouraged hopes that, at last, the party was being refreshed with normal - even attractive - people. For a while it seemed as if Howard had, as he claimed, been midwife to a "huge rebirth". The awkward facts that the party had only secured a net gain of 33 and still had fewer than 200 MPs, and less than a third of the total votes, remained hidden by Mr Blair's "bloody nose".

Mr Howard, grabbing a few minutes' rest in his constituency home in the Kent village of Lympne, knew differently. He knew he would be endlessly asked, for instance, about whether he was living up to his own word "accountability" by not quitting. Contrary to some speculation, his wife, Sandra, was not pushing him to stand down. In fact she, along with almost everyone in the party wanted him to continue. Certainly the Board, the ruling body dominated by grandees representing the grassroots, thought they had an agreement from Mr Howard that he would not "do a Major" and quit, as Hague did, at once.

Thus, it was a surprise to all when the leader broke off from a routine speech at Roehampton University at 11.30am on Friday with the words, "I am 63 years old." His double announcement that he intended to stand down "sooner rather than later" and call for a change in the leadership rules enraged senior party figures. There has been a very quiet review of the party's constitution taking place in recent weeks including the rules. It was in its very early stages, however, and no conclusions had been reached. Mr Howard's shock announcement has destroyed any chance the party may have had of a quiet deal on the leadership rules.

Charles Moore spoke for many senior Tory figures in condemning it. Writing in yesterday's Daily Telegraph the paper's former editor likened the resignation to student politics, "secretive, conspiratorial, overcomplicated, probably calculated to benefit some chum or other".

That "chum" is likely to be David Cameron, Michael Howard's former special advisor and 38-year-old boy wonder of the Tory right. The current rules, devised by William Hague, mean that an MP with little authority over his peers can be elected leader. Iain Duncan Smith's disastrous tenure is enough to convince many that never again should a leader be imposed by the grassroots.

David Davis has spent years, if not decades on the circuit of local party functions in preparation for just such a contest. He is unpopular with MPs but would be a hot favourite if he could get to the membership election. Mr Howard's proposed rule change stands in his way; his supporters view Howard's move with suspicion.

The row over the rule-change will, therefore, simply be a leadership battle by proxy. For the moment all contenders are keeping their heads down in what one veteran called a "beauty contest of discipline" because Sir Patrick Cormack has still to be elected in a contest postponed by the death of his Lib Dem rival candidate.

Nevertheless leading modernisers are already returning to the fray to use the limited progress to argue their cause. Damian Green, a Downing Street adviser in the John Major years, said: "Rather than have different people saying the same things people have heard from the Tories for 20 years, we need to show that we care about childcare, and long-term care for the elderly - the same things that modern Britain cares about ... dealing with the problems of modern Britain but not railing against it."

Another MP said: "We have a serious brand image problem. We choose second XI issues that appeal only to a narrow section of the electorate and when we try to sound passionate end up sounding nasty."

David Cameron, moreover, is not the first choice among Tory MPs who would rather leave the party than be led by Davis. "Because he is young, everyone assumes he is a moderniser," said one. "As far as I can see, at heart he is an orthodox right-wing Thatcherite, but he has gay friends and sometimes he doesn't wear a tie."

The Conservatives' long-term problem is that their standing as the main opposition party is under challenge in large parts of the country. They are still the challengers in rural England, but, outside London, the big metropolitan centres, plus Scotland, Devon and Cornwall, belong to the Liberal Democrats. The Tories took Newbury and Guildford from the Lib Dems, but ceded them Solihull. They won some Welsh seats for the first time since 1992, but lost a three-way race in Falmouth.

Thursday night was celebration night at Lib Dem HQ as the party pocketed 62 seats, including a sensational win in Manchester Withington, becoming the biggest third party in the Commons since the 1920s. It can also take heart at the very large number of student votes garnered in other university cities such as Cambridge, Cardiff, Bristol, Birmingham and Leeds. This suggests that a large number of first-time voters have started out as Liberal Democrats, and could retain the habit.

Charles Kennedy's party also has good reason to complain about an electoral system that allocates them so few seats, and enables Labour to be grossly over-represented. When counting ended yesterday, the Labour Party had emerged with 55 per cent of the seats in the Commons, on less than 35 per cent of the total votes, including those of Northern Ireland; the unfortunate Liberal Democrats had 22 per cent of the votes but less than 10 per cent of the seats. Only the Tories had got what they deserved: they had 32 per cent of the vote, and 30.5 per cent of the seats.

The voters seemed to have calculated how to withhold support from the Labour Party without imperilling it, causing patchy returns. Four weeks ago, we reported: "Some experts think that [Labour MP] Jim Knight has a better chance of survival in Dorset South, where his majority is just 153, than Oona King, defending a 10,057 majority in Bethnal Green and Bow against the former Labour MP George Galloway."

They were right. King lost her seat at 4.30am on Friday, after a bitter, bad-tempered contest, which makes Galloway one of three independent MPs in the new Commons. Jim Knight held Dorset South with a majority of 1,812. It is no longer even among the 30 most marginal Labour seats. (The biggest cliffhanger was Crawley, where Labour's Laura Moffat clung on by 37 votes.)

What may spoil the Liberal Democrats' parade is the thought that their extra four per cent of the popular vote came predominantly from Labour voters registering a protest against Tony Blair.

But as MPs return to the Commons this week, it will not be the future of the Lib Dems that holds their attention, or the next Tory leader, but how long Blair will stay in Downing Street. The answer, according to someone close to him, is "at least 18 months". His demeanour on Friday morning, confidently addressing journalists outside No 10, was of someone determined to carry on.

While Labour's economic record mostly stood up to scrutiny during the election campaign, they proved vulnerable on two policy areas - pensions and council tax. Blair has put the two Davids he trusts most, Blunkett and Miliband, in charge of these , implying his determination to stay until they are sorted.

But in British politics it remains the case that a Prime Minister cannot survive without a stable political base in the House of Commons, the hard lesson that Lady Thatcher learnt. The new Parliamentary Labour Party is different from the one that dispersed last month. More than a fifth of the old lot have gone, retired, like Jack Cunningham and Estelle Morris, or unseated.

Among Thursday night's casualties there was a disproportionate number of Blairite loyalists, such as the three defeated ministers Melanie Johnson, Christopher Leslie and Stephen Twigg.

Many of those who have returned have experienced a cold blast of hostility from former Labour voters, directed personally at Blair and his decision to take the country to war. Martin Salter, re-elected as MP for Reading West, reflected that Labour could, like Harold Macmillan's in 1959, have said, "You've never had it so good", but for the war.

"If it hadn't been for Iraq we could have run a Supermac election, run almost exclusively on the economy and public services. There was a third Labour landslide there for the taking," he said.

Peter Bradley, a loyalist who lost his seat in The Wrekin, Somerset, attributed defeat partly to Iraq. "But I've been a supporter of Tony Blair's. I supported the Iraq war," he said. "Sometimes, you just hit choppy waters."

Frank Dobson, the former health secretary, who weathered an 11 per cent swing to the Liberal Democrats in his Holborn seat, said: "A lot of people said, 'I can't vote for you because of the war and while Tony Blair is leader.' I didn't encounter a single person who said, 'I'm really keen to vote Labour so that we can farm out more of the health service or hand more schools to various private concerns.'"

Comments from other MPs were more succinct - "He's a dead man walking", said one. Another called him"the fish on the counter that has been there a day too long".

Even if Blair feels reinvigorated now, and ready for that full parliamentary term that he promised to serve, even though he will undoubtedly face yet another Conservative leader at Prime Minister's Questions, his time is fast running out.

Additional reporting by Steve Bloomfield