The Conservatives have lost control of 12 councils while Labour have gained four in early local election results.
Sir Keir Starmer’s party have snatched Medway off the Tories and will run the Kent council for the first time since 1998 and have also seized control of East Staffordshire.
Another significant blow to the Conservatives was inflicted by the Lib Dems, who won control of Windsor and Maidenhead – former Prime Minister Theresa May’s constituency.
Overnight, Labour also won Plymouth and Stoke-on-Trent from no overall control, while the Tories lost Tamworth, Brentwood, North West Leicestershire, Hertsmere and East Lindsey to no overall control.
That pattern continued into Friday morning as the Tories also lost South Kesteven, South Gloucestershire, Welwyn Hatfield and Maidstone to no overall control.
Labour – which also won the race for mayor of Middlesbrough – were performing best when it came to seat gains, clocking up over 110 so far, compared with the Conservatives, which have lost nearly 200.
While only a quarter of the results have been declared as of Friday morning, Sir Keir Starmer celebrated the gains as showing his party is on course to win a majority at the next general election.
Politics live: Alarm bells’ in Tory HQ as party takes ‘hammering by any standards’
Speaking from Medway – which has been controlled by the Conservatives since 1998 – the Labour leader told supporters: "You didn’t just get it over the line, you blew the doors off.
"We’re having fantastic results across the country.
"Make no mistake, we are on course for a Labour majority at the next general election."
A Labour majority would require an enormous swing bigger than Sir Tony Blair’s landslide election victory in 1997.
Sky News’ election analyst Professor Michael Thrasher said that based on the 1.7 million votes counted overnight, Labour is on track to be largest party in Westminster but fall short of outright majority at the next election.
Labour MP and national campaign co-ordinator Shabana Mahmood said the party has "never been complement about the challenge we face".
But she insisted the party was "winning back votes" after its disastrous performance in 2019 and a majority government was within its reach.
She said the results showed Labour had made a "positive case" to tackle the cost of living crisis whereas the Tories "crashed the economy and Rishi Sunak doesn’t know how to fix it".
PM: ‘It’s still early’
Despite early losses, the prime minister was defiant as he spoke to reporters outside the Conservative party headquarters on Friday morning.
He said it is always "disappointing" to lose "hard-working Conservative councillors" but "in terms of the results, it’s still early".
"We’re making progress in key election battlegrounds like Peterborough, Bassetlaw and Sandwell," he said.
"I am not detecting any massive groundswell of movement to the Labour party or excitement about their agenda."
However, a Labour source said the Conservatives had only won two seats in Sandwell, where it now has 12 seats compared to Labour’s 60, adding: "If that is all the PM and CCHQ can point to as ‘progress’ they are in enormous trouble."
Read more: See full elections results as they come in
Labour has shown sound gains when it comes to both seats and vote share in numerous areas, including Thurrock, Rushmoor and Redditch.
The majority of the councils which have confirmed their results so far only had a third of their seats on the ballot, meaning few authorities have changed hands.
The coming hours will see more councils with all their seats up for grabs – such as the areas that have seen major upsets so far – so a clearer idea of the parties’ performances is yet to emerge.
Tory MP and government minister Johnny Mercer, who represents Plymouth, called it "a terrible night" in his constituency as "we lost every seat we stood in".
He added: "Take it on the chin, learn and go again tomorrow. It’s going to be a fight but I like a fight."
Meanwhile, Baroness Anderson – a former Labour MP for Stoke-on-Trent – said the win in her area meant "everything" to the party.
She told Sky News: "It means that people are willing to listen to us again… I think it means they have forgiven us for having Jeremy Corbyn as leader… and candidly it means they are rejecting the policies of the Conservative Party, which is doing so little for them."
Elsewhere, the Liberal Democrats are showing early gains, winning over 50 seats by early Friday morning.
In Windsor and Maidenhead, the party won 13 seats while the Conservatives lost 16 – plunging their number of councillors to the lowest seat total ever (seven).
‘Ground-breaking night for Lib Dems’
Party leader Sir Ed Davey called it "a ground-breaking night" for the Lib Dems, and said they had "delivered a hammer blow" to the so-called "Blue Wall" of Tory seats.
He added: "The message from voters is clear: they are sick to the back teeth of Rishi Sunak and his out-of-touch Conservative government."
The Green Party is also currently up by 17 seats.
Voters are deciding who runs services in 230 (out of 317) local authorities in England, with around 8,000 councillors’ seats up for grabs.
Mayors are also being chosen in Bedford, Leicester, Mansfield and Middlesbrough in what is the biggest round of local elections since 2019.
The seats on offer were last contested in 2019, when Mrs May was weeks away from resigning, and her party lost 1,300 seats.
Labour, led by Jeremy Corbyn at the time, also suffered losses with the Lib Dems, Greens and independents coming off best.
Analysis: Is this a new dawn for Labour?
Here are the benchmarks from Sky News’ elections analyst Professor Michael Thrasher for what would make a good and bad night for the main parties:
• Fewer than 300 losses: This would see the party winning council seats back from Independents, with Labour and the Lib Dems not prospering.
• 500 losses: The party could argue "mid-term blues" and will assume Labour could be caught before the general election.
• 750 losses: This would indicate a clear swing to Labour, but still less than opinion polls imply.
• 1,000 losses: A very bad night, with a third of all seats defended by the Conservatives lost.
• 700 gains: The best local elections for at least a decade. Labour would look on its way to becoming the largest party in Westminster, even if short of a majority.
• 450 gains: These results would be better than in 2022, when local elections took place in Greater London.
• 250 gains: A disappointing result for Labour in the context of recent opinion polls.
• Under 150 gains: A step backwards for Labour.
• 150+ gains: Eating into Conservative territory and could put some marginal constituencies in play at the next election.
• 50-100 gains: Comfortable enough in their own heartlands but only modest further progress.
• Fewer than 50 gains: Fewer than 50 gains: Still struggling to pose a real threat to the Conservatives in the south.
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