Labour retains Wythenshawe and Sale East in a by-election, while the Conservatives are pushed into third place by Ukip and the Liberal Democrats lose their deposit.
Labour held the seat comfortably with 55 per cent of the vote, an increase of 11 per cent.
But David Cameron denied the opposition party had achieved a “breakthrough”, telling ITV1 Daybreak: “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.”
It is the latest setback for Mr Cameron’s party, which came second in Wythenshawe and Sale East in the 2010 general election.
It is also the sixth time the UK Independence Party has achieved runner-up status, and polled more votes than the Conservatives, in a by-election since 2010.
The Lib Dems endured a miserable night, winning just 1,176 votes and losing their deposit after achieving less than 5 per cent of the vote.
Ukip leader Nigel Farage said the party was making “really good solid, steady progress”, with 18 per cent of the vote. He said: “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.
“Anything over 15 per cent was what I was hoping for and had it been over 20 per cent, it would have been a terrific result for us, so 18 per cent… I’m very pleased.”
The by-election was called after the sudden death of Paul Goggins at the age of 60. Labour leader Ed Miliband congratulated the winning candidate, Mike Kane, on Twitter, saying: “Delighted Labour’s Mjpkane has been elected. He will be an excellent MP for Wythenshawe and Sale East.”
Mr 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.”
Liberal Democrat President Tim Farron said the result was “genuinely very disappointing”.
He told BBC Radio 4’s Today programme: “There are two things going on. One is that the Liberal Democrats in by-elections have done well in those places where we have strength, like Eastleigh and Oldham East and Saddleworth, and have done extraordinarily badly, by and large, in those areas where we don’t.
“It’s not that hard to understand why. The reality is that in by-elections in the past Liberal Democrats were often the none-of-the-above party, and the reality is now we are one of the above.”