Nigel Morris: A personal rebuff for Brown, an existential threat to his party

Labour appeared to have averted electoral meltdown last night, but the stark reality is that the party has achieved its worst electoral performance for nearly two decades.

It is also a personal rebuff for Gordon Brown, who becomes only the second sitting Prime Minister since 1979 to lose a general election. Whatever the exact make-up of the House of Commons, 6 May 2010 will go down in political history as marking the death of New Labour, the most formidable election-winning machine of recent times.

Ironically, some key figures from the Blair years – the former prime minister himself, Lord Mandelson and Alastair Campbell – played crucial parts in the campaign. The inquest will centre on whether Labour simply ran out of steam after 13 years in office or lost the knack of knowing what "middle Britain" was thinking.

Across wide parts of the country – the South-West, the Home Counties and suburban London – Labour has come close to being wiped off the electoral map.

Mr Brown's immediate future in a hung parliament could depend on Nick Clegg's attitude to him. Will the Liberal Democrat leader refuse to prop up in power a Prime Minister so strongly rejected by the electorate? Or would Mr Brown have to step aside for a Labour leader more sympathetic to radical electoral reform?

Even if Mr Brown manages to cling on in office, his long-term survival prospects look uncertain and jockeying for position to succeed him is inevitable.

David Miliband, the Foreign Secretary, is certain to run and would secure powerful support from many influential figures in the party. His supporters say they have already held informal talks – not involving him – on how to promote his candidacy.

The possibility of left-winger Jon Cruddas, who came third in the Labour deputy leadership election in 2007, running as his deputy has been canvassed in party circles. The pair could present themselves a unifying ticket appealing to all sections of the party.

Some Labour MPs will press the case of Alan Johnson, the Home Secretary, but he might decide to accept the leadership needs to pass to the next generation.

Ed Balls, the Schools Secretary, has come close to confirming he intends to stand for the leadership – as long as he holds his Morley and Outwood seat in West Yorkshire. Other possible candidates could include Yvette Cooper, the Work and Pensions Secretary, who is Mr Balls's wife; the deputy Labour leader Harriet Harman and Andy Burnham, the Health Secretary.

Ed Miliband, the Climate Change Secretary, is widely admired within the party's higher echelons, but would be unlikely to stand against his older brother. Whoever wins, he or she will lead a Parliamentary Labour Party that has vastly changed.

A succession of familiar faces will be missing from the green benches. Many prominent Blairites, including Alan Milburn, Patricia Hewitt, John Hutton and Stephen Byers, stood down at the election. But so did almost half of the members of the hard-Left campaign groups of MPs.

Whoever wins will face a formidable challenge of raising the morale of a battered and bruised party, not least because it may need to exploit the Tory government's relative weakness. A key problem will be finding a way of heading off the Liberal Democrat claim to the progressive vote in Britain.

Labour's defeat yesterday came as little surprise: its overwhelming rejection by the voters has been like a slow-motion car crash. Apart from a brief honeymoon after Mr Brown succeeded Tony Blair – and an even briefer acknowledgement of his steely response to the banking meltdown – Labour has trailed far behind the Tories for four years.

While hostility to the party has been intense over that period, opinion polls showed that Mr Brown was disliked even more than his party.

Time and again he scored dismal ratings, with the country making clear it preferred the new-style Conservative party being fashioned by David Cameron. Mr Brown's biggest blunder – one he never recovered from – was failing to call a general election in autumn 2007 when Labour led in the polls.

Since then he has been beset on all sides by problems: the economic crisis, the disaster of scrapping the 10p tax rate, dire election performances, rebellions over detention of terrorist suspects for 42 days and part-privatisation of the Royal Mail and the resignation of adviser Damian McBride for plotting to smear Tory opponents.

If that was not enough, Labour, as the governing party, bore the brunt of the tide of public fury over MPs' expenses, with the activities of many haunting the party.

The succession of failed coups against Mr Brown may have demonstrated his resilience, but also underlined the extent of the feuding at high levels of his government.

In retrospect the party might have missed a golden opportunity to revive its fortunes last June, when James Purnell's dramatic resignation could have triggered Mr Brown's downfall.