In regional and local elections in England, Scotland and Wales, incomplete returns showed that the Conservatives lost at least 500 town, county and borough council seats while the main opposition Labor Party gained 354and the moderate Alliance of Liberal and Social Democratic Parties picked up 191. More than 5,000 local seats were on the ballots.
The council elections constituted the biggest challenge to the government before the next general election, which Thatcher has to call by June 1988. Now in her second five-year term, she is expected to call the elections earlier, perhaps in the fall of 1987.
In the two special parliamentary elections, the Conservatives lost one seat to the Liberal-Social Democratic alliance and appeared to have barely edged out the party in the other race.
The alliance, a coalition of the Liberal and Social Democratic Parties, is Britain's third largest party. It generally has portrayed itself as moderate, positioned between Labor on the left and the Conservatives on the right.
It carried the parliamentary district of Ryedale by nearly 5,000 votes over the Conservatives, with Labor a poor third. The Conservatives had carried the district, a traditional stronghold, by 16,100 votes in the last general election in 1983.
The Conservatives apparently won the second parliamentary by-election, in their stronghold of West Derbyshire, but the alliance candidate has demanded a recount.
Both seats had been held by Conservatives. The special elections were called because one Conservative resigned his post and another died.
Labor Party leader Neil Kinnock said, "We have plenty to celebrate. It puts us right on course for winning the general election."
"We've lost a lot of votes, a lot of seats," conceded Kenneth Baker, a member of Thatcher's cabinet.