David Cameron has denied that the Conservatives' thrashing in the Wythenshawe and Sale East by-election represents a "breakthrough" for Labour, which held the seat comfortably with 55% of the vote, or Ukip, which forced his party into third place.
Former councillor Mike Kane won the Greater Manchester constituency for Labour, polling 13,261 votes, while the UK Independence Party surged from fifth place to second despite leader Nigel Farage complaining the campaign had been "as dirty as they come".
The eurosceptic party's success and the 11% decline in the Tory vote was yet another by-election blow to the Prime Minister, who saw his candidate defeated by Ukip for the sixth time since the 2010 general election.
But the Liberal Democrats were dealt a humiliating blow when they polled just 1,176 votes - not enough to hold their deposit.
The by-election was brought about by the sudden death of serving MP Paul Goggins on January 7, at the age of 60.
In his victory speech, Kane said voters had "sent a very clear message" to the Government.
"They have rejected the failed policies of the out-of-touch Tories, they have rejected the isolationism and scaremongering of Ukip.
"It's a result which emphatically demonstrates that people here know the NHS is not safe in David Cameron's hands, and that we've had enough of his utterly out-of-touch Government."
But Cameron said the Tories were never expecting to do well in a rock-solid Labour seat.
"Obviously, the Wythenshawe by-election was in a very safe Labour seat and there was never much doubt about the result," the Conservative leader told ITV1's Daybreak.
"When people know that there is a by-election they know that the Government isn't going to change, but obviously messages are sent and signals are sent and protests are made. Government should always listen to those and I always do.
"Obviously, one would prefer to come second rather than third, but I don't think this is a particularly surprising result in Labour holding this seat.
"I don't think it was the sort of breakthrough that people were talking about."
Wythenshawe is the latest in a number of by-elections that have seen Ukip take second place, including South Shields and Eastleigh last year.
Farage, speaking from the count at Manchester Central convention centre, said he was pleased with how his party performed but complained forcefully about the way the election was run, with postal votes issued just three days after the poll was called.
"The point about democracy is you should see who the candidates are, see what their agendas are and then form an opinion," he said. "That is not happening and it is reducing, frankly, these by-elections to farces.
"It is a system that allows the incumbent party to call the by-election at a time of their choosing and it doesn't give a free, open contest to anybody else."
Farage said that Ukip's performance in increasing its share of the vote by 14.5% to 18% represented "really good solid, steady progress".
"When you start from a base of nothing and your level of public recognition is very low, then to do what we have done in a very short space of time, (I'm) delighted," he said. "Anything over 15% was what I was hoping for and had it been over 20%, it would have been a terrific result for us, so 18%... I'm very pleased."
Ukip candidate John Bickley said he was "over the moon" with the result and claimed his party was "in better shape" than the Conservatives. He told Sky News: "We've taken votes off all of them and that includes Labour."
Labour leader Ed Miliband congratulated Mr Kane in a message on Twitter: "Delighted Labour's Mjpkane has been elected. He will be an excellent MP for Wythenshawe and Sale East."
Labour increased its share of the vote by 11% to win by an emphatic margin of 8,960 votes.
But the figures made gloomy reading for the Liberal Democrats, with vote share plummeting by 17 percentage points to take them below the crucial 5% needed to hold their deposit.
Some 24,024 votes were cast - a turnout of 28.24%.