Unite the union has warned working people not to be fooled by the right-wing UK Independence Party (Ukip) after its better than expected result in the Eastleigh by-election.
The Lib Dems retained the seat vacated by disgraced former minister Chris Huhne who resigned after pleading guilty to perverting the course of justice.
The Tories had a disastrous result and were beaten into third place by Ukip, which secured 28 per cent of the vote, and Labour trailed in fourth.
Unite general secretary Len McCluskey warned: "Working people should not be by fooled by Ukip. While Labour MEPs supported a curb on bankers' bonuses this week, Ukip and the Tories opposed it.
"Ukip showed that it is on the side of the one per cent and for a deregulated Europe that gives free reign to the casino bankers who caused the crash.
"They know people are fearful and fed up under austerity but instead of offering honest, genuine solutions, they resort to tired distortions and clichés about 'foreigners'."
Labour's candidate, satirist and author John O'Farrell, polled only 4,088 votes, a marginal 0.2 per cent increase on the party's 2010 general election vote share.
It was a disappointing performance for Labour leader Ed Miliband, who had hailed the by-election as a test for his "One Nation" message.
Mr Miliband said: "Clearly I would have preferred to have got more votes than we did but this was always going to be a tough fight for Labour - it's a seat that we've never won.
"What we want to hear from the Prime Minister is a recognition that people are deeply unhappy with the direction of the country and he's going to listen," he added.
Attempting to put a positive spin on the result, Tory deputy chairwoman Sarah Newton said: "Actually, it's good for the coalition that the coalition has kept a seat despite all the difficulties facing the Lib Dems and the coalition."