UK's Brown faces leadership challenge after Labour's thumping by-election defeat

The latest defeat may be a "death knell" to the Labour Party, which slumped to its worst municipal poll defeat in more than 40 years, losing a massive 331 council seats earlier this month.

Brown, who many claim is on his way out, has put up a brave front, saying he was still confident of winning the next general election.

"The message we are getting is people are concerned. They are concerned about food prices, concerned about petrol prices and concerned about what is happening to the economy," he said. "The message of the British public is clear and unequivocal: they want us to address these challenges."

"We are unequivocal and clear in our direction but we're going to address and are addressing these problems," Brown said.

"We will continue to do so and my task is to steer the British economy through what have been very difficult times in every country of the world and that I will continue to do," he said.

However, the Conservatives feel that the result mark the "end of New Labour."

Conservative leader David Cameron has hailed the Crewe and Nantwich by-election win a "remarkable victory" and said it marked the "end of New Labour."

However, "there won't be one hint of triumphalism or one hint of complacency" from them, Cameron said.

"We don't want to win just because Labour is failing. We don't want to win just because the Prime Minister is failing. We want to win because we have the right ideas for Britain's future," he said.