Scottish nationalists defeat Blair's party

EDINBURGH, May 4 (Reuters) Scottish nationalists committed to independence from Britain became the largest party in the Scottish parliament today in a severe blow to Prime Minister Tony Blair's Labour Party.

The Scottish National Party's (SNP) win in Thursday's election ended 50 years of Labour dominance in Scotland, although it will need to ally with other parties to form a governing coalition in Scotland.

SNP leader Alex Salmond, who has pledged a referendum in three years on Scottish independence from Britain, declared himself the winner. ''This is an historic moment,'' he said.

Blair is expected to announce next week he is stepping down as prime minister and the SNP victory bequeaths a thorny problem for his successor, almost certain to be finance minister Gordon Brown, a 56-year-old Scot.

Thursday's polls for local councils, the Scottish parliament and Welsh assembly were the last chance for 39 million voters to give a verdict on Blair's decade in power.

The opposition Conservatives, resurgent under new leader David Cameron, were the big winners in local council elections, winning more than 800 seats and inflicting heavy losses on Labour.

Labour also lost seats in Wales, where there is also a devolved assembly, but remained the largest party.

The SNP won 47 seats in the Scottish parliament to Labour's 46, official results showed.

COALITION NEGOTIATIONS Who rules in Scotland depends on complex negotiations on forming a coalition that will be held over coming days.

Blair said the results were far from a rout and gave a ''perfectly good springboard'' for the next general election.

''You always take a hit in the mid term,'' he told BBC television. ''We came from worse results a few years ago and won an election. And we're going to do it again.'' The Prime Minister's popularity has slumped over the Iraq war and a series of political scandals.

Brown could rule until May 2010 without holding an election but doubts remain over whether he can rein in the opposition Conservative Party before the next parliamentary poll.

A BBC projection showed the Conservatives had taken 41 per cent of the national vote, a threshold deemed necessary to win power at a general election. But mid-term elections are not necessarily a reliable indicator of national results.

Labour had braced itself for a drubbing in the elections -- its share of the vote was projected at just 27 per cent. Blair's government slumped to a record low of 26 per cent in 2004 polls but still won a parliamentary election the following year.

The Scottish vote was marred by hitches. Voters complained that tens of thousands of votes had been rejected because people were confused by complex ballot papers. Counting in some major constituencies was delayed by computer scanning glitches.

REUTERS SM RK2335